Resolution No. 6608
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RESOLUTION NO. 6608
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A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING AND AUTHORIZING THE EXECUTION
OF AN AGREEMENT RELATING TO THE INITIAL AUDIT
AMONG THE BOULDER CANYON PROJECT CONTRACTORS
PURSUANT TO THE BOULDER CANYON PROJECT ELECTRIC
SERVICE CONTRACT AND BOULDER CANYON PROJECT
IMPLEMENTATION AGREEMENT AMONG THE FOLLOWING
PARTIES: ARIZONA POWER AUTHORITY, CITY OF
BOULDER CITY, COLORADO RIVER COMMISSION OF
NEVADA, THE DEPARTMENT OF WATER AND POWER OF THE
CITY OF LOS ANGELES, THE METROPOLITAN WATER
DISTRICT OF SOUTHERN CALIFORNIA, SOUTHERN
CALIFORNIA EDISON COMPANY AND THE CALIFORNIA
CITIES OF ANAHEIM, AZUSA, BANNING, BURBANK,
COLTON, GLENDALE, PASADENA, RIVERSIDE AND VERNON
WHEREAS, the City of Vernon by Resolution No. 6540 on
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November 1, 1994, entered into an Implementation Agreement with
the Bureau of Reclamation, Western Area Power Administration, and
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the Boulder Canyon Project (BCP) Contractors which, among other
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matters, authorized the BCP Contractors to conduct an initial
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audit of the Boulder Canyon Project; and
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WHEREAS, the BCP Contractors include the Arizona Power
Authority, the City of Boulder City, Nevada, the Colorado River
Commission of Nevada, the Department of Water and Power of the
City of Los Angeles, the Metropolitan Water District of Southern
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California, Southern California Edison Company and the California
cities of Anaheim, Azusa, Banning, Burbank, Colton, Glendale,
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Pasadena, Riverside, and Vernon; and
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WHEREAS, the initial audit will enable the BCP
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Contractors to better enforce the provisions of the Electric
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Service Contracts and the Implementation Agreement; and
WHEREAS, the Boulder Canyon Project contractors have
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negotiated an Agreement Relating to the Initial Audit Among the
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Boulder Canyon Project Contractors Pursuant to the Boulder Canyon
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Project Electric service Contract and Boulder Canyon Project
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Implementation Agreement which will authorize the Colorado River
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Commission, a Nevada state agency, to enter into an audit
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agreement on behalf of the BCP Contractors; and
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WHEREAS, the cost to the City of Vernon is estimated to
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be less than six Thousand Dollars.
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NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
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CITY OF VERNON AS FOLLOWS:
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SECTION 1: The City Council of the City of Vernon hereby
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finds and determines that the recitals contained hereinabove are
true and correct.
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SECTION 2: The City Council of the City of Vernon hereby
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approves said Agreement Relating to the Initial Audit, a copy of
which has been presented to the City Council concurrently with
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this resolution, and the City Council hereby orders said Agreement
to be received and filed by the City Clerk.
SECTION 3: The City Council of the city of Vernon hereby
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authorizes the Mayor and the City Clerk to execute said Agreement
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for, and on behalf of, the City of Vernon.
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SECTION 4: The City Clerk of the City of Vernon shall
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certify to the passage of this resolution, and thereupon and
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thereafter the same shall be in full force and effect.
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APPROVED AND ADOPTED this 2nd day of May, 1995.
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--- .. LEONIS C. MAL G, Ma r
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ATT~
BRUCE V. MALKENHORST,
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STATE OF CALIFORNIA )
)ss
COUNTY OF LOS ANGELES )
I, BRUCE V. MALKENHORST, city Clerk of the City of
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Vernon, do hereby certify that the foregoing Resolution, being
Resolution No. 6608, was duly adopted by the City Council of the
City of Vernon at a regular meeting of the City Council duly held
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on Tuesday, May 2, 1995, and thereafter was duly signed by the
Mayor of the City of Vernon.
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(SEAL)
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Western's point of contact shall be as follows:
Name: Gloria Jordan
Address: Phoenix Area Office
615 South 43rd Avenue
Phoenix, AZ 85005
, Telephone Number: (602) 352-2649
Fax Number: (602) 352-2630
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Reviewed By: I "
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1. Descriotion of Contrac~_ .,.
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State Agency: Co lorado R I veri:Gomm f s's i on'
Budget Account Number: 4490, 4497
Expenditure Category Number.;.}. 10. 04
Line Item Authority Available (yes/no): lQ...
Upon Board of Examiners Approval or
Other Effective Date: .
Contractor Name: KP~IG Peat ~,larw I ck LLP
Address: ~O East Temole, Suite 900
Salt Lake Citv, UT 84111
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Termination Date: February 28, 1996
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New Contract or Contract Amendment?
New Contract
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Type of Contract.
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Audit and Accountlr.9 Services
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Purpose of Contract. Describe work to be accomplished. I nit I a lAud i t of the 80u I der
Canyon Project Books and records.
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Payment for services to take place at the f<lte of $ per
(time interval) to a maximum of $ for the term of the contract.
If (a) not applicable, .specify other basis of payment.' not-to-exceed $583,581.00
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b.
c. If amendment, explain changes.
II. Justification
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What conditions mandate that this work be done?
Implementation Agreement
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8. Explain why state employees in contracting.agency or other state agencies are not able to do this work. (Be
specific.) Not enough t I me or exper I ence
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Were bids or proposals solicited? yes
If not, why not?
If so, please attach.
a.
b.
c.
Why was this contractor chosen in preference to others? Best proaram and know I edqe of
project, as well as lowest bid.'
10.
If the contract continues an existing contractual relationship, confirm that the state is receivino- the services
that the contract purports to provide. Please explain. N/;\ :> ,
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III. Other Information
11. Is the contractor employed by the State of Nevada, any of its political subdivision or by any other
government? n~ If S?, is contractor pl~ing to render services while on annual leave, compo time,
sick leave, or on hIS own tIme? Please explam.
12. Has the contractor ever been engaged under contract byemy. state agency? If so: specify when for what
-I':'.-:':~'_' , duties, for what compensation, and for which agency. Coloraao River Commissionls' . .:...
<J~,~jf:C'C. "991-:2 AUdlt:- - - '-, - ,- -, .'.. -...- -----'.- ,
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Rev. Oii9J
13.
What is the source of funds used to pay contractor? Please breakout by percentage if contractor is to be
paid by more than one funding source.PowerSa I es
14. To what state fiscal year will contract cost be charged?
1995-96
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Signature of State Ag~ncy Head
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DISTRIBUTION: BvarU of E:uminen. ""biLe; L:!iaLotive C"unscl Burtau. Goldenrod: CoalnC'.inJ A!e:Io.Y. Blue
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EXHIBIT G
AGREElYIENT RELATING TO THE
INITIAL AUDIT
AMONG THE
BOULDER CA1,-(Y'ON PROJECT CONTRACTORS
PURSUANT TO THE
BOULDER CA1'NON PROJECT ELECTRIC SERVICE CONTRACT
AND
BOULDER CA1'NON PROJECT IMPLEMENTATION AGREElYIENT
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AGREEiYIENT RELATING TO THE
INITIAL AUDIT
A1\10NG THE
BOULDER; CA1'fYON PROJECT CONTR4..CTORS
PURSUA1"{T TO THE
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BOULDER CA1~"YON PROJECT ELECTRIC SERVICE COl'ilRACT
AND '
BOULDER CA1....rYON PROJECT INlPLEiYIENTATION AGREEiYIEPll
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AGREEl'YIENT RELATING TO THE
rnITIAL AUDIT
AlvIONG THE
BOULDER CA1'fYON PROJECT CONTRACTORS
PURSUANT TO THE
BOULDER CA1'ITON PROJECT ELECTRlC SERVICE CONTR;\CT
AL'ID
BOULDER CAi'rYON PROJECT IMPLEiYlEN1ATION AGREEMENT
1.
THIS AGREEMENT is entered into this
day of
1995 ,by and be.tween the authorized representatives of the contractors for Boul~er Canyon
Pr~ject electric service, namely the Arizona Power Authority, LIJ.e City of Boulder City,
Nevada, the Colorado River Commission of Nevada, the Department of \Vater 2..t."1d Power of
the City of LDS Angeles, The Metropolitan Water District of Southern California, Southern
California Edison Company, the Cicy of Anaheim, California, the City of Azus2., California,
the City of Banning, California, the City of Burban.tc, California, the Cirj of ColLOn,
California, the City of Glendale, California, the City of Pasadena, California, the Cicy of
Riverside, California, and the Cicy of Vernon, California, hereinafter collectively referred to
as the~'1=ontractors" and individually as a "Contractor".
EXPLANATORY RECITALS
2.
This Agreement is made with reference to the following facts, among othe::s:
(a)
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Section 17 of each Electric Service Contract for the Boulder Ca.11yon
Project, hereinafter referred to as the "Electric Service Contract" , provides that the AUu10rized
Representatives of each parry shall have access for any purpose to applicable portions of all
books and records of the other Contractors, Reclamation, and Western relating to transactions
associated with the Electric Service Contract.
(b)
Section 15.2 of the Boulder Canyon Project Implerr.emation Agreement,
hereinafter referred to as the "Implementation Agreement" , provides that the Contractors willi
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hire an independent auditor to perfonn an Initial Audit of the Boulder Canyon Project,
hereinafter referred to as the "Project".
(c)
Section 15.2.3 of the Implementation Agreement further obligates each
Contractor to pay for its proportionate share of the Initial Audit pursuant to that Contractor's
Project percentage indicated in Appendix G of the Implementation Agreement.
(d)
The Contractors have detennined that one of the Contractors should serve
as the entity responsible for contracting with an auditor for the perfonnance of the Initial
Audit,. hereinafter referred to as the "Contracting Parry", and this Agreement details the
responsibilities of the Contracting Pany and its relationship to the other Contractors.
(e)
The Contractors have detennined that an Audit Committee should be
established with representatives from each Contractor to ma.i(e decisions relating to the Initl2.1
Audit to be performed and this Agreement details the responsibilities of the Audit Committee.
(f)
Tills Agreement is being entered into by the authorized representatives
of the Electric Service Contracts of each Contractor, hereinafter referred to as the " Authorized
Representatives", to explicitly define and establish the procedures to be followed by th.e
Contractors. in order to have perfonned an independent Initial Audit of the Project and to
explicitly derme and establish the -u.nderstanding among each of the Contractors as it relates to
the responsibilities and obligations .of t?e Contractors in relation to the. performance of the
independent Initial Audit of the Project.
CONTR..A.CTING PARTY RESPONSIBIUTIES .
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The Contractors hereby designate the Colorado River Commission of Nevada
as the Contracting Party for the Initial Audit.
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(a)
The Contracting Party shall enter into a "Contract for Professional
Auditing Services" with an Independent Auditor, selected pursuant to this Agreement, for the
performance of the Initial Audit, hereinafter referred to as the "Audit Contract", attached
hereto as Exhibit A and made a part hereof.
(b)
The Contracting Party shall carry out an responsibilities and obligations
established for the Contracting Party in the Audit Contract, subject to the restrictions to u"le
Contracting Party's authority explicitly defmed in this Agreement.
(c)
The Contracting Party shall not assume any liability under the Audit
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Contract on behalf of any of the other Contractors, except as specified therein.
(d)
The Contracting Party shall promptly distribute to the Audit CommiEee
copies of all correspondence, documents, reports and data received by the Contracting Pc.rty
from the Independent Auditor pertaining to the Initial Audit:
(e)
The Contracting Party shall serve as Chair of the Audit Committee ad
as such will establish dates and times for meetings of the Audit Committee (including telephone
conferences), will nOtify all Audit Committee representatives of such meetings, will c::.11
meetings:-of the Audit Committee to order and close, will reduce all decisions of the Audit
Committee to writing and will distribute all such written decisions to the Audit. Commicree
representati,,:es.
(f)
The Contracting Party shall review and approve invoices submitted in
accordance with the Aud~: Contract prior to the Independent Auditor submitting such invoices
to each Contractor for payment.
(g)
When the Contracting Parry has approved a monthly invoice of tJ.le
Independent Auditor, Ll1e Contracting Parry shall promptly transmit by fa.\: to each Comrac:or I
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a copy of tl'1e approved monthly invoice for review. If the Comracting Party receives no I
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comments from the Contractors within the time specified in Subsection 4(f), the Contracting \
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Party shall notify the Independent Auditor that the monthly invoice has been approved. If any
Contractor expresses concerns regarding the monthly invoice wiiliin the time specified in
Subsection 4(f), the Contracting Party shall, in accordance with the Audit Contract, consider
such concerns in its decision to approve or reject the monthly invoice.
AUDIT COMMITTEE RESPONSIBILITIES
4.
An Audit Committee is hereby established for the purpose of carrying out and
ensuring the timely completion of the Contractors' responsibilities under Section 15.2 of u1e'
Implementation Agreement.
(a) Each Contractor shall designate one representative to u1e Audit
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Committee. Each Contractor's u lt ormmttee represematIve ana an alternate representative,
if any, is listed in Exhibit B attached hereto and made a pan hereof:
(b)
Unanimous consent or approval by all representatives to the Audit
Committee present during an assembly of the Audit COffiu-lirree (by meeting or telephone
conference) shall be required on any matter coming before the Audit Committee which falls
within the authority of the Audit Committee, as defined herein, except lhat decisions made
regarding-t.~e subject matter of Subsection 4(d) and 4(e) hereof shall be by unanimous consent
of all Authorized Representatives.
(c)
Tne Contractors acknowledge that the Audit Commirree has. develooed
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and thus far approved the following documents:
(i)
(ii)
The "Request for Proposals for Professional Auditing Services" "
The "Contract for Professional Auditing: Services"
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(iii)
The "Boulder Canyon Project Initial Audit Proposal Evaluation
Criteria", and
(iv) The "List of Certified Public Accounting Finns to be Considered
for RFP Purposes".
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(d) The Audit Committee shall recommend and the Authorized
Representatives shall select the Independent Auditor for the Initial Audit and shall forward the
name of the selected Independent Auditor to the Contracting Party.
(e)
The Audit Committee shall recommend any amendment to the Audit I
Contract that will change the amount due and payable, the scope of services or deliverables,
or the work schedule set fonh in the Au~it Contract. The Authorized Representatives shall
approve any amendment to the Audit Contract.
(f)
The Audit Committee representatives shall review monthly invoices which
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have been approved by the Contracting Party within the time given in the cover fax
transmitting the monthly invoice, which shall in no event be less than two full working days.
(g)
The Audit Committee shall review the work product and deliverables of
the Independent Auditor and shall provide recommendations to the Contracting Parry regardi.l1g
the acceptability of such work product and deliverables.
(h)
The Contracting Parry shall review and the Audit Comminee shall ma.l:e
decisions regarding whether any proposed use by the Independent Auditor of the repons,
studieS', -research documents and data received or obtained by the Independent Audirer in
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relation to its work on the Initial Audit is contrary to the interest of the Cona-actors.
CONTRACTOR OBLIGATIONS
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5.
Section 15.2 of the Implementation Agreement establishes an obligation for u1e
Contractors to have cond~cted an independent Initial Audit of the Project and an obligation for
each Contracrer to pay for its proponionate share of the Initial Audit. In fulfillment of that
payment obligation, eJch Contractor hereby agrees to make payment directly to the Independent
Auditor for its proponionate share of the Initial Audit as defIned by Se:::don 15.2.3 and I
Appendix G of the Implementation Agreement. I
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(a) Each Contractor agrees to render payment directly to the Independent
Audiror withi.il thirty (30) days after the Contractor receives from the Independent AuditOr an
invoice for such Contractor's proportionate share of services by the Independent Auditor which
has been approved by the Contracting Party.
(b) The Contractors agree and understand that a Contractor's failure to pay
the Independent Auditor within thirty (30) days after its receipt of an invoice approved by the
Comn:.cting Party may result in the assessment. of interest charges and other levies as defmed
by me Audit Con~rac~ against such Contractor. The Contractors also agree and understand ui.at
2.!ly delinquem payment by one or more Contractors may jeopardize the completion of the
Inidal Audit, thereby r~sulting in default by such Contractor(s) of its obligation (Q have I
pe::iormed an Ironal AUOlt III accordance wIth the Implementanon Agreement.
(c) Each Contractor shall be individually responsible for its own covenants,
obligations and liabilities as herein provided. The Contractors agree that any dispute which
arises benveen the Independent Auditor and any Contractor who fails to fulfill its obligations,
including payment of moneys owed, shall not involve any ot!.1er Contractor in such dispute I
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resolurion;-except as otherwise provided for herein. I
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. (d) Each Contractor covenants not to sue the Contracting Party and. agrees \
to release the Contracting Party ~rom a~y liability, exce~t that arising fr~m gross negligence I
or intentional misconduct, assOCIated WIth the Contractmg Party's responsibility detailed in I
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Se~tion 9 of the Audit ~ontract to review and approve or reject invoices prepared by the
Independent Audiwr and presented to the Contracting Party for that review.
TERivf
6. This Agreement shall become effective upon execution by the AUlhorued
Representatives and shall terminate upon termination of the Audit Contract.
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NO OBLIGATION TO CONTINUE AUDIT IF PAYMENT NOT MADE
7.
Nothing in this Agreement shall be construed to obligate the Contracting Party
to continue to have performed the Initial Audit by the Independent Auditor in the absence of
full and timely payment by each Contractor for the amount due and payable by each Contractor
for the Initial Audit. If such situation arises, the Contractors agree to'use the dispute resolution
process provided for in the Implementation Agreement.
AUTHORlTY TO ENTERINTO AGREEMENT
8.
The Authorized Representative of each ~omractor executing this Agreement
hereby represent that he or she has the requisite authority to bind 2nd obligate L~e organization
for whom he or she is signing to the terms and conditions of this Agreement pursuant to
applicab.le law.
EXECUTION BY COUNTERPART
9.
This Agreement shall be executed in fifteen (15) coumerpans, a!l.d UDen
execution by all the Contractors, each executed ceumerpan shall have the same ferce a.T1d eEe::t
as an original instrument and as if all Contractors had signed the same instrument.
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IN 'WITNESS WHEREOF, the parties hereto have caused this Agreemem to be
executed on the date first written above.
ARIZONA PO\oIER AUTHORITY
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By 7/tt;" /y. ~.i--v:/v' ..//.
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Name t1ark 'S. ~Iitchell
Title: Executive Director
CITY OF BOULDER CITY
By
Name
Title
THE METROPOLITAN WATER
DISTRICT OF SOUTHERN CALIFORNIA
By'
Name
Title
CITY OF ANAHEIM
By
Neme
Title
COLORADO RIVER COHHISSION OF
NEVADA
By
. Name
Title
DEPARTMENT OF WATER AND POWER OF THE
CITY OF LOS ANGELES
By
Name
Title
SOUTHERN CALIFORNIA EDISON
COMPANY
By
Name
Title
CITY OF AZUSA
By
Name
Title
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1 IN WITNESS \VHEREOF, the parties hereto have caused this Agreement to be
2 executed on the date first wriuen above.
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4 ARIZONA POWER AUTHORITY
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7 Name
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Title
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CITY OF BOULDER CITY
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By
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Name
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Title
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THE ~IETROPOLITAN WATER
DISTRICT OF SOUTHERN CALIFORNIA
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By
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Name
Title
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CITY OF ANAHEIM
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Name
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Title
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A~OAN!,':"
ctN(;tAt.:S
O""P'ICZ
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Title
DEPART~'IENT OF WATER AND POHER OF THE
CITY OF LOS ANGELES
By
Name
Title
SOUTHERN CALIFCRNIA EDISON
COMPANY
. By
Name
Title.
CITY OF AZUSA
By
Name
Title
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IN WITNESS WHEREOF j the parties hereto have caused Llis Agreement to be
executed on u1e date first written above.
ARIZONA POWER AUTHORITY
By
Name
Title.
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CITY OF BOULDER CITY
P / / '":'l .-(/
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Name ~D:-C'<;:':,\l- ,t::-.~c'/el-
Tit 1 e c: i (yO' 1-1 fr i-;.-";Z '\. ~ (f.J-(Tr il..it:"" )
THE METROPOLITAN WATER
DISTRICT OF SOUTHERN CALIFORNIA
By
Name
Title
CITY OF ANAHEHI
By
Name
Title
COLORADO RIVER COHHISSIGN OF
NEVADA
By
Name
Titl€:
OEP ARTHENTI 0::: I.IA-I::iJ ,\ ~In CO\ lCD OC -I LlC'
l tf _.'\ r~l't_ I 'f~.\' I ill....
CITY OF LOS ANGELES
By
Name
Title
SOUTHERN CALIFORNIA EDISON
COMPANY
By
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Name
Title
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CITY OF AZUSA
By
Name
Titl~
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1 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
2 executed on the date first written above.
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ATTORNEY
GC:Ne::~A'-'5
OFFiCe:
LAS VEGAS.
NEVAOA
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O...ll\.a~-"';~I
ARIZONA POWER AUTHORITY
By
Name
Title
CITY OF BOULDER CITY
By
Name
Title
THE METROPOLITAN WATER
DISTRICT OF SOUTHERN CALIFORNIA
By
Name
Title-
CITY OF ANAHEIM
By
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APPROVED AS TO FORM AND lEGALITY
. JAMES K. HAHN, CITY ATTORNEY
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COLORADO RIVER COMMISSION OF
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ARIZONA POWER AUTHORITY
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CITY OF BOULDER CITY
By
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THE ~IETROPOLITAN WATER
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Ti~le Manager, Spedal Concracts I
DEP ARHIENT OF '#,TER AND P0\4ER OF TRE
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ATTORNEY
GENE"'AL'S
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LAS VEGAS.
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ARIZONA P0\1ER AUTH,ORITY
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CITY OF BOULDER CITY
By
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THE METROPOLITAN WATER
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Name Bin o. Carnahan
Title Public Utilities Director
APPROVED AS TO ;:ORM ..
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ArrORNEY
G-ENERAL.oS
OFFICE
LAS VEGAS.
NEVAOA
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CITY OF BANNING
CITY OF BURBANK
By
By
Name
Name
Title
Title
CITY OF COLTON CITY OF GLENDALE
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Name Name
Title Title
CITY OF PASADENA CITY OF RIVERSIDE
By By
Name Name
Title Title
CITY OF VERNON
By
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eonis C. Malburg ~ '4 /
Attest: - ~,~4"Z-
Mayor Bruce V. lvfaLK:enhorst
City Clerk
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Name
Title
~pp~oyed as to Form:
~fff!B?:a;'fJ?~
Cit:y. ~ttorney
9
BOB MILLER. Governor
., ~/I"
ptANET FRASIER ROGERS. Chairman
.' RICHARD W. BUNKER, Vice Chairman
STATE OF NEVADA
JAY BINGHAM, Commissioner
Director
THOMAS A. COWARD. Commissioner
ROBERT L. CROWELL. Commlsslone,
MARY J. KINCAID. Commissioner
LARRY SCHEFFLER. Commissioner
COLORADO RIVER COMMISSION
OF NEVADA
June 6, 1995
Mr. Milton H. Thackeray, Partner
KPMG Peat Marwick LLP
60 East South Temple, Suite 900
Salt Lake City, Utah 84111
Subject:
Contract for Professional Auditing Services Between the Colorado River
Commission and KPMG Peat Marwick LLP
Dear Mr. Thackeray:
The Colorado River Commission has been advised that the subject contract was approved
by the Nevada State Board of Examiners earlier today. In accordance with section 6 of the
contract, I hereby authorize you to commence with the work described in the contract upon
receipt of this letter.
Enclosed is one fully executed original of the contract, along with all exhibits.
The Commission looks forward to working with you on this important project.
./l
Sincerely, , /'
,'-li /../~ /-/ /~ /
i .;0- f J '
V~~L }fiIC
l~/Janet FrasielRogers
Chairman
cc: David Luttrell, P.E.
Authorized Representatives from "Agreement Relating to the Initial Audit among the
Boulder Canyon Project Contractors pursuant to the Boulder Canyon Project Electric
Service Contract and Boulder Canyon Project Implementation Agreement"
~
555 E. Washington Avenue, Suite 3100, Las Vegas, Nevada 89101
Phone: (702) 486-2670
Fax: (702) 486-2695
TDD (702) 486-2698
'0).1101"
,,~
,
CONTRACT NO. P18-62
CONTRACT FOR PROFESSIONAL AUDITING SERVICES
BETWEEN
KPMG PEAT MARWICK
AND THE
COLORADO RIVER COMMISSION
OF THE STATE OF NEVADA
Obtain the amount of any unpaid plant balances as of May 31,1987, and as ofL1e end of each of
the fiscal years in the seven year period ended September 30, 1994, from information contained in
the PRSS prepared by Western.
Verify the applicable rate of interest as set fonh in authorizing legislation for the project.
Using the information obtained above, review the amount of interest accuJI1ulated in the PRSS for
the periods ended September 30, 1987 through September 30, 1994 for reasonableness.
8. Direct and Indirect Char~es to Visitors Facilities
All construction costS for the Visicors Facilities are accumulated by Reclamation in cost
authorities, which are sununarized in, the Cost File Summary Reporr (730).
Detennine the cost al,lthority cedes used by Reclamation to account fer exuendirures oenaininO' to
the consrruction of the Visitor Center and related facilities. . . . ;::
Review the procedures, including administrative controls, established by Reclamation to caorure
directcosrs within the Project applicable to Visitor Facilities cost aU1l1orities. .
Identify all procuremem conrracrs established by Reclamation in connecticn with the cons~l.!ction
of the VisitOr Facilities.
Select a samole of direct charges 2CCruing under each of the signi.ficam urocurement ccmuaccs and
trace to origmal supporting documentation. Determine that the ccs"ts ch:u-ged to the Visitor
Facilities a.re appropriate.
Document the types of ~direct cha:ges 0?L7ed ?~ ~eclamation (incIudi..'1g itS he~dquaners office)
and allocated co the Project and to me V15ltOr Faciliues. .
In conjunction with Task No. 14, de~ennine the methods used by Recla.,T,arion to allecate 1.,,""!dL.-ect
costs to the Project and to the VisitOr Facilities.
Determine wheti1er the methods used by Reclamation to a1lcc~l.Ce hldirect cos"t:$ to the Visitor
Facilities cost authorities are consistent willi. methods used co allocate indirect COStS co ou1er COSt
authorities within Reclamation's Lower Colorado Region. .-\ssess the re3.Sonableness or the
allocation basis. .
Summarize the types of indirect ch:u-ges included in the cost pools. Such costs \\illli.~elv iIlclude
administrative sala,..-jes, administrative service center information resources COSiS, 'utilities,
mainrenance. and other overhead costs.
For a reoresemarive period, review mathematical accuracy of the allocation of indireCt COSiS to the
Visitor Facilities. For selected periods, select a sample of charges included in the indire~ coSt
pool and asrree to original supporting documentation and determine whether such COSiS are orudem
and related-to the indirect administration of the Project and the Visiter F~.lities. -
5
.'
9. Starns of Construction Claims
Interview legal representatives for the Conu~ctors, Western, and Reclamation to detennine the
starns cause and estimated amount of all c1alIIlS (assened and unassened) aaainst Reclamation
related to the consrruction of the Visiror Facilities. '"
Obtain and review the signific2.I1t agreements between the construction contractors and
Reclamation to assess the relationship of the claims to specific provisions in the construction
contracts.
Determine what ReclaInation has Gone to mitigate the costs of claims filed by construction
contractors.
Determine whether claims appear to toe excessive in relation to the monerary value of u1e contract.
Prepare a summary of all claims l,;c1udi.l1g-description, amount, and managemenr's,assessed
probability of loss. -
10. Imemal Fiscal Comrols Related to Vls1rors Facilities
Review the DOI-OIG Report 94-1-915 which addresses the reasons fOi the cost !J.icreases on the
Visitors Facilities. Determii1e the ex:em of GIG procedures, hie objectives of such procedures
and the nature of OIG findings. Inquire or management's response to OIG recormnendations:
Consider the results of the OIG's wCi"k in performing Task Nos. 8 and 11.
Review the procurement and conrr.:.c:ing procedures and internal controls utilized by Red::..'ll3.don
during the construction period induCing what procedures exist to ensure a competitive bidding
process.
Review the construction contr3.ctS fer the Visitor Facilities to gain all underr..and1'g of t.~e a2!eea
upon pricing srrucrure for ar:y .ch~ge or~e::s implemented d~~g the consrruc?cn of the Visitor
Facilities. Select a S~'11ple or slg::rlli"1C~m C:12,Ilge orders and veTh'")' that Recla.inaaon procedures for
review and approval of change orde:s a..re adequate. .
11. Actual Ex-penditures 2.t"1d Encumi;Jr.::-:ces Re!ctin~ to Visitor FacUlties Re:naining to BeP:!.id
Obtain the cost file summary repor: (BOR 730) to identiJy actual expendimres incurred ror t:1e
Visitor Facilities u1.rough SepteffiCer 30, 1994. Obtain the applicable bud~et reoortS u1at
surrunarize the obligations and enco.l~brcnces outStanding ,as or September 30, 1994. .
Interview Project conscruction en~r:eers 2.t"1d obtain estimates for COSt to comple~e. Review with
enlrineers the procedures followed to esri...-nate the remaining costs necessary co comole~e the
Pr~ject. Consider all potential contingences including the claims identi.fied in Task No.9, above.
6
12. LPSS - Cost end Revenue Data
In connection with procedures perfon:ned b~low '. con~der inf~rmation previously documented as
part of the CFO audit of \Vestern and U1 conjunctlon WIth prevlOus tasks, as appropriate.
Document the procedures used by Western and Reclamation in formulating the annual Oteratii1\!
maintena.T1ce, interest, uprating, principal payments ~>n the Federal investment, 2Jld reuiaa:me;~
budgetS for the Project. Determine how budgetary information is impac:ed by acrua.i results of
operations and other historical financial data.
Document ul:e role of the budgetary process in the power repayment srudy and how this tr'...nslate~
into the basis for determining power rates. Determine how the Agencies em improve the
consistency of budgetary information included in the PRSS with budgetary data included in
reporting in connection with the Plm.
Determine lJ.t..te procedures performed by Westem and Reclamation to reconcile (crosswalk) t..."-:e
financial LT1formation included in the PRSS to ResultS of Operations repor~, CFO reportS, ~'1a"
other f..nmcial. infonnati~n to be reponed to the Contractors under ule Irnplemenwion A~mem.
Document how reconciling differences between the reportS are explained. Assess the adeauacv of
such expl3...T1::DOnS and consider are3.S for improvement. . .
Consider 2..>."1d ma.ke recommendations as to how processes cm be improved i.., order for u"-:e
Contractors 3.n,d other interested panies to more fully understmd overall coordimuon of .the
budgeting, ratema..1,Qng and reconciliation functions. Mak.e recorr.mendations for sllnnii..';'-in2: i.:."-:e
crosswaL~ process. . . -
Prepare ex..'1ibitS to explain and assist in this effort.
13. 0bli2:2.red FU..rld Balances.
In conne:::ion with procedures performed below, consider irJoDTIarion p:viously dccumented as
pan of i.:.1e financial statement audit of Western and in conjuncuon V.iu.1 previous t::.s.ks, as
appropri2!.e.
Obtain an understanCiing of procedtlI"'vS used by Western and Reclamation to ac:cunt for obli2:2.ted
fund bal2..>."1ces, including which general ledger accounts are used to acc.l.-nclare obligations. -
Chan u"le r10w of the obligation process, beginning with the initiation of crmsactions throuQ:..~
processing and, finally, lJ.\rough reporting. -
Docume:lt how obligated fund balana:s are reported in the PRSS and tre:!.ted in the crcsswaf<.
Consider :md ma.1.ce recommendations as to how Western and Reclamation C~l imurove oresenc
accoW1tmsr for obligated fund balances, including coordination with budgeting, ra(ema..~2:, ::...1d
reconcili.,':;on functions. -
7
14. Overhead and Other Indirect Char2'es Allocated to the Proiect
Document the types of indirect charges incurred by Reclamation and allocated to the Project.
Perform this step in conjunction with procedures related to ~direct COSts allocated to the Visiwrs
Facilities as outlined in Task No.8.
Determine the methods used by Reclarn~ri~n to allocate indirect COSts to the Project, including
what allocation bases are used to allocate mdrrecr costs.
Assess the propriety of the bases used to allocate indirect COSts based en u,1e activities carried our
at the Project.
Determine whether the methods used by Reclamation to allocate indirect COStS to the Project/cost
authorities are consistent with methods used to allocate indirect costs to other COSt authorities
within Reclamation's Lower Colorado Regior. .
Determine the basis on which budgers are established for overhead pools and determine what
procedures are in, place to control u,1e alTIount of overhead costS incurred.
Summarize the types of indirect charges included in the cost pools. Such COStS willli.\ely include
administrative salaries, adminisrradve service cenrer informacion resources costs, utilities,
maintenance, and other overhead COStS.
For selected periods, review mathem2.ticaI accuracy of the allocation of indirect COStS to the
Project. .
For selected periods, select a ~:unple. O.I char~es included in. the indirecr COSt pool :?1'1Q agree to
original supporting documenranon ana cetermme wherher sucn COStS are prudent and related to the
indirect administration of u,e Project
Review consistency of overhead alloc:uion amounts berween years.
15. Accounrin2' for ReDlacementS
Note: According to sections 6.1 and 6.2 of the Implememation Agreement, replacementS flli"'lded
by aopropriarions should be capitalized rather than expensed: Tnerefore, the classii1cation of
replacementS cm significandy h~luen~e rhe o:tcome of the rate semng pro~ss. The Plan reqcis.-es
Recla..."'11anon to track the cumulauve amount or replacements charged to operation and maintena!1~
(replacement capital advances) for purposes of detennining "repayable advances" J which represent
potential refunds to existing Contractors. -
Gain an understanding of regulatory requirements regarding accounting for replacements. Tne
Hoover Dam Act of 1984 provides direction regarding replacements and determination of COStS.
Interview Reclamation Dersonnel to determine their understanding of the reauirements for
accounting and classifying expendirures for replacements, including the coding of such
exoendicures in Reclamation's acCOUmii1.g system. Consider policy for "reolacemems" re!a,ed
1::.bor COStS and whether amounts have been accounted for properly. .
8
Presently, the Agencies use a work order system to identify standard units of propeny. Consider
the adequacy of the detail pro'1ded by this system and the Ie.vel of activity and segregation of costS
in meeting the reponing reqmremems of the Impl~mematlon Agreement. Explore and SUQ:Q:est
ways to use the exisLing work order system to prOVIde the necessary level of detail to idemi.l:y-a.'1d
allow for replaceme:1tS funded from current revenues of the Project
Based on results ofproced?res ~ote.d above, together. with test work performed in previous taSks,
determine whether cost verificaoon 1$ necessary to esomate amOUJlt of misclassiI-'iecl-replacemems.
Review RecIamaticn' s cumulative "capital advances" amount and" assess reasonableness in
consideration of prccedures noted above. "
16. Multi-Proiect COSTS Allocated to the Proiect
Identify and define ill multi-project cos'tS at Western (includfug direct and indirect costs aSsociared
with \Vestem facilities) concencrating on L1e Phoenix Area Office facilities ar,d also considerinO"
the Denver ne~dqu::.:ners facilities. ::l
Inquire of W es~m ~rsonnel to ascer:L2in the narure of these facilities a.'1d che benefitS they provide
to the other projec:s managed by Western. Tour a.r:X facilities with which we are not alre~dy
famili:rr wiG'" to g"i"1 first-hand knowledge of the servlces and eenefitS provided to the Project
Review the procedures use~ by Weste:m to capture the CO~tS (along v.1th the suppor.ing sys:e:ns
and concrols) u1at are muln-purpose ill nature, documenung the sources cf the infoITilation for
these types of costS.
Assess the L1eore~cal basis applied by Western for allocating multi-project cOSts. EvaIu1te
whether COSLS allocated are cong:rue~t with the benefitS .derived by uie Projeci:. If pracr:c:1l,
review the w~ther:1ati.cal accur2.CY or Western's calculauon, a.1'1d de;ermine whet:.1er costS are
charged to t:"-:e pro~er project.
Compare multi-prciect cost pools and allocated amountS on a ye:rr-by-ye:!I basis ror consiste::1c'f.
Based on the results of procedures noted above, detennine whether additional test work is
necessary to est:iJT~:e amount of un-eJ.:lSonabie multi:projea cost ailoc::.tions.
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DELIVERABLES
The deliverables for the Independent Auditor selected to perform the Initial Audit shall
be as follows:
. 17 copies of the initial draft Boulder Canyon Project Initial Audit Report
(Report) .
. 17 copies of each re-draft of the draft Report
. 17 copies of the fmal Report
· 17 copies of each progress statement
Final and draft reports required under this contract shall be delivered by the Independent
Auditor to the Commission's representative in accordance with Exhibit F.
The Report shall be divided into seventeen (17) major sections. An executive summary
of no more than ten (10) pages in length shall be provided in the fIrst section. The remaining
sixteen (16) sections of the Report shall contain data, fIndings, conclusions, opinions and
recommendations related to each item of the audit listed in the scope of work section of the
contract. The Independent Auditor shall document all sources of data used in arriving at the
Independent Auditor's fIndings and conclusions. Acceptable documentation shall include
footnoting information sources and/or attaching pertinent source documents as appendices as
appropriate. In addition, the Report shall also provide attached or separate appendices
containing the Independent Auditor's relevant workpapers. Workpapers shall be prepared in
accordance with the Govemment Auditing Standards, 1994 revision.
Finalization of the draft Report shall involve a series of interactive steps involving the
Contractors, Reclamation and 'Western as indicated in the section of the contract on work
schedule. The Independent Auditor shall complete the necessarY work and shall make those
changes and modifications to the Report that occur as a result of the review by the Contractors,
. Reclamation and Western, provided the changes a.nd modifIcations are specifIcally requested by
the Commission.
From the time the contract with the Independent Auditor is executed, until delivery of
the final Report, the Independent Auditor shall prepare and submit monthly progress statements.
The statements shall detail, for each month, work performed by the Independent Auditor, data
reviewed by the Independent Auditor, problems encountered by the Independent Auditor, and
preliminary fIndings, if available, by the Independent Auditor. The statements shall also identify
the funds expended by the Independent Auditor for each task and shall compare actual
expenditures to planned expenditures shown in the Independent Auditor's budget proposal for
each task. The statements shall be enclosed with each invoice rendered in accordance with the
contract for professional auditing services.
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EXHffiIT B
'WORK SCHEDULE
EXHIBIT B
WORK SCHEDULE
WORK SCHEDULE
If the Independent Auditor receives written notice from the Commission tQ proceed with
the work on or before June 5, 1995 and if Reclamation and Western grant the Contractors
permission to commence field investigations related to the Project on or before June 5, 1995,
then the Independent Auditor retained hereunder shall be obligated to achieve the following work
schedule:
ACTIVITY COMPLETION DATE
*Commence Initial Audit June 5, 1995
I Entrance Conference June 5, 1995
Deliver draft Report December 1, 1995
Meet with Contractors to review draft To be scheduled between
Report September 11, 1995 and
September 22, 1995
Deliver re-draft of the Report January 6, 1996
Meet with Contractors, Reclamation and To be scheduled between
Western to review re-draft of the Report February 1, 1996 and
February 17, 1996
Deliver fmalized Report February 28, 1996
*For each day written notice to proceed with the work from the Commission and/or
permission from Western and Reclamation to commence the Initial Audit is delayed beyond June
5, 1995, the above schedule shall be extended by one business day and this exhibit shall be
revised accordingly.
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EXHmIT C
INDEPENDENT AUDITOR
PROJECT TEAM
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EXHIBIT C
!0i"DEPENDENT AUDITOR
PROJECT TEA1"VI
Schedule 1
Total CO~lC; and Profit Sllmm:>..rv
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DireCt cost of service:
P'>...rt!ler
Senior managers
Senior consultant
~fanager
Seniors
5 r.af f
S 22,654
43,112
~O,658
8,876
51,697
18.363
185,360
Direct overhead @ 122.89'0
Administrative overhead @ 57.50 pe: hour
Profit@ 58.00 per hour
227,621
39.CeO
! l.WO
~93 .58 1
,
Out-of-pccket costs:
Trci.':xo~tion. per diem, e:.c. (~~m3te.dX):
..l.J.i:~are.
6 RJT 5LC, TJ"T to IXnver. CO @ ~CO
8 RJT Las Vegas, NY to De:1ver, CO @ S40
4 RJT Phocnb::. AZ to IXnvC". CO @ 6eO
15 RJT SLC. UT to Phocni.-c. .~ @ ~CO
3 RJT Phoenix, ,A.Z to L3.s Veg3.S,:NY @ S3CO
32 RJT SLC, 'liT to L3.s Veg;.s, NV @ 5350
10 RJT Dallas, TX to L3.s Vegas, NY @ 58CO
2 R!T AlbuQuerque, N1vf to SLC, Ul @ ~CO
1 RJT St. pe'te, FL to Us Veg3.S. NV @ 51,3CO
Per diem:
SO days @ SS6/day in Golcen, CO
66 days @ S86/day in Phoc:-ix, AZ
280 days @ S64/day i.., Us Veg3.S. :t-.'V
10 days @ S86/dA.y in SLC, ul
Rental car:
280 days @ S45/day
},.fi1e2.ge to Boulder Cicy office (32.S Rff, 85 ;niles, 5.17 per)
}.oiileage, other - Phoeni;s::, IXnve:, e:.c_
Other (exuress mail, long dist.:mce telephone, parkL."1g, e:.c.)
, .
2AOO
3,200
2AOO
6,OGO
900
11,200
8.000
800
1,300
6.880
5,676
1 i ,920
860,
12,600
Total Costs and Profit
7.460
9~
1.500
90.000
5583.531
'" \Ve would saive to ~w""e d.i..~::unted :0:::..-es ';.ohene'ler possible.
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Schedule 2
Personnel and Other Costs SummarY bv Task
Billing Billing · Total Proiect Task No.1 Task No.2 Task No.3 Task No.4 Task No. 5 Task No.6
N" ::..-ne Oassification ~ H.m!ll ~ Hmrr.s. ~ Hmn:s. ~ &.!lIS. ~ H.m:ll ~ H2m. ~ 1fuw. ~
Milt Tn:ackeray Parmer S209 .60 200 S41.920 10 S2,096 7 51,467 10 S2,096 8 SI,677 10 52,096 10 S2,096
Lynn DeRry Parmer 209.60 60 12,576 2 419 2 419 3 629 3 629 3 629 2 419
Senior
Joseph Bacy manager 145.08 240 34.819 5 725 5 725 5 725 5 725 5 725 5 725
Senior
William Stoffels manager 142.90 160 22,864 10 1,429 10 1,429 10 1.429 10 1,429 10 1,429 10 1,4:9
Senior
B rot Fiorek manager 118.66 180 21,358
Senior
Denise BarOCln manager. 118.92 200 23)84 20 2,378 20 2,378 40 4,757
Senior
Chris Jciu"1.S manager 148.47 40 5,938 40 5,939
Senior
Arvle Hicks consultant 109.86 960 105,465 49 5.398 85 9,303 61 6.666 15 1.642 15 1,691 15 1,S67
Kirk SL-:1.'Tlons Manager 91.58 260 23,810 10 916 10 916 . 20 1,832 20 1,832
Bret Pe!erson Senior 69.02 460 31.749
Jennife: Dedelow Senior 73.29 200 14,658 40 2,932 40 2,932 40 2,932
Steve P:lSsey Senior 69.17 160 11,067 - 40 2,767 - 20 1.383 20 1.383
Willia:.~ Ma'-lc~ Senior 78.82 480 37,833
Susan ~Iaini Senior 72.60 400 29,040
Charles Ande:ron Senior 69.75 200 13,950 40 2,790 40 2, 790 40 2.790
Kare:l. CJ,vence: Senior 68.26 120 8.191 .
Chris Whetman Staff 62.98 200 12,596 40 2.519 - 80 5,038
Matthew Hage Staff 6131 280 17.166 40 2,452 ,80 4,905
.Mark Bethers Staff 61.98 200 12,396 40 2,479
Roger ~{orga."l Staff 61.98 200 12.396 - 120 7,438
5.200 493.581 266 24,055 459 37.181 329 29.829 81 12,040 83 9.786 82 9..551
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Out-oi-pocket costs .. 90.000 4.606 7.939 5.689 1.401 1.443 !.~22
5583.581 S28,661 S45.120 S35.518 S13.441 S11.229 S 1 0.973
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-
* See Schedule 3
** S~ Schedule 1
NOte: ~linor rounding differences in totals.
2
.
Task No.7
H2Yll Q2lli.
10 S2.,096
3 629
Task No.8 Task No.9 Task No. 10 Task No. 11 Task No. 12 Task No. 13 Task No. 14 Task No. 15 Task No. 16
lJm!.a Q2ill H2Yli ~ Hm.lll ~ Hm!ll Qllis. ~ ~ l!Qyu ~ ~ ~ ~.~ lli1.!ill ~
20 54.192 15 53.144 10 52.096 10 52.096 20 54.192 10 52.,096 20 $4.192 15 53,144 15 53.144
6 1.258 5 1,048 3 629 3 629 6 1.258 3 629 6 1,258 5 1.048 5 1,048
5 725 50 7.254 40 5,803 5 725 30 4352 15 2.176 5 725 50 7,254 5 725 5 725
10 1,429 10 1.429 10 1,429 10 1.429 10 1.429 10 1,429 10 1,429 10 1.429 10 1.429 10 1,429
40 4,757
80 9.493 40 4,746 10 1.187 10 1,187 40 4.746
40 4.757
40 4.757
3
Billinl! Rate Breakdown
lv1ilt Thackeray
Lynn DeBry
Jos..."'Ph Baty
William Stoffels
B~nt Florek
Denise Banon
eluis Johns
Arvle Hix
Kirk Simmons
B~t Peterson
Jennifer Dedelow
Steve Passey
William Mancuso
Susan Maini
Chuck And=on
K:m:n Cavender
Chris Whetman
Manhew Hage
MarkBeth=
Roger Morgan
Name
Billing
classifi-
cation
Partner
Partner
Sr. manager
Sr. manager
Sr. manager
Sr. manager
Sr. manager
Sr. consultant
Maroger
Senior
Senior
Senior
Senior
Senior
Senior
Senior
Staff
Staff
Staff
StalT
Schedule 3
Hours
Cost of
service
rate
Direct
over-
bead
@
122.8'70
Admini-
strative
over-
bead @
$7.50
per bour
Billing
rate
before
profit
Profit
@ $8
per
bour
Final
billIng
rate
200 S 87.12 S 106.98 S
60 87.12 106.98
7.50 5 201.60 S 8.00 5 209.60
7.50 201.60 8.00 209.60
Schedule 4.
Estimated Hours and BillinQ:s SummarY - Total bv Month
SlaifLevel
Partn= '
Senior manag=
Senior consultant
Manager
Seniors
Staff
Monthly labor
hours
Mav
June
8
20
30
30
50
20
60
160
40
440
260
Julv
Au!!.
240
160
180
200
40
960
260
460
200
160
480
400
200
120
200
280
200
200
58.16
57.18
46.30
46.42
59.68
42.35
34.14
24.02
25.94
24.09
28.42
25.63
24.35
23.68
21.31
20.56
20.86
10.86
71.42
70.22
56.86
57.CO
73.29
52.01
41.92
29.50
31.85
29.58
34.90
31.00
29.90
29.08
26.17
25.25
25.62
25.62
~ Oct. Nov.
20
140
160
40
360
160
20 40 60
140 140 130
160 160 80
30 20 20
320 200 190
150 50 40
880
820 610 520
Feb. MaIc!t
20 12
20 20
20 20
7.50 137.08
7.50 134.90
7.50 110.66
7.50 110.92
7.50 140.47
7.50 101.86
1.50 83.56
7.50 61.02
7.50 65.29
7.50 61.17
7.50 70.82
7.50 64.60
7.50 61.75
7.50 60.26
7.50 54.98
7.50 53.31
7.50 53.98
7.50 53.98
Dee. Jan.
20 20
50 10
30 20
20 10
80 20
40 20
240 120
8.00 145.08
8.00 142.90
8.00 118.66
8.00 118.92
8.00 148.47
8.00 109.86
8.00 91.58
8.00 69.02
8.00 73.:9
8.00 69.17
8.00 78.82
8.00 72.60
8.00 69.75
8.00 68.25
8.00 62.98
8.00 61.31
8.00 61.98
8.00 61.98
Tow
260
&:0
960
260
2.0:0
~
60
52
5.100
138
20
80
120
40
360
160
980
780
Monthly billing
amount 5 17.000 S 98.000 5 81.000 S 95.000 590.000 575.000 566.000 528.000 516.000 510.000 5 7.581 5583.581
--- -==.==
4
"
EXHIBIT D
CONTRACTOR PROPORTIONATE SHARE
BILLING PERCENTAGES
EXHIBIT D
CONTRACTOR PROPORTIONATE SHARE
Bll.,LING PERCENTAGES
BILLING PERCEJ\"TAGES
The Independent Auditor shall bill each Contractor for its proportionate share of the Initial Audit
in accordance with the following cost sharing percentages:
AriZona Power Authority:
Colorado River Commission of the State of Nevada:
City of Boulder CitY:
Department of Water and Power of the City of Los Angeles:
The Metropolitan Water District of Southern California:
Southern California Edison Company:
City of Anaheim:
City of Azusa:
City of Banning:
City of Burbank:
City of Colton:
City of Glendale:
City of Pasadena:
City of Riverside:
City of Vernon:
1
19.1381 %
21.3470%
L3961 %
20.2915 %
20.6125 %
9.8806%
1.5995%
0.1577%
0.0733 %
0.8096%
0.1211 %
1.3063%
1.1940%
1.1996%
0.8731 %
EXHIBIT E
CONTRACTOR BILLING ADDRESSES
EXHIBIT E
CONTRACTOR BILLING ADDRESSES
CONTRACTOR BILLING ADDRESSES
The Independent Auditor shall submit each Contractor's bill for their proportionate share of the
Initial Audit to the following addresses:
Arizona Power Authority
1810 West Adams
Phoenix, AZ 85005
Colorado River Commission of Nevada
555 E. Washington Ave, Suite 3100
Las Vegas, NY 89101
City of Boulder City
401 California Avenue
Boulder City, NV .89006
Department of Water and Power of the City of Los Angeles
111 North Hope Street, Room 1255
Los Angeles, CA 90051
The Metropolitan Water District of Southern California
350 South Grand Room 1026
Los Angeles, CA 90071
Southern California Edison Company
2244 Walnut Grove Avenue, Room 480
Rosemead,CA 91770
City of Anaheim
201 S. Anaheim Blvd., Suite 802
Anaheim, CA 92805
City of Azusa
213 East Foothill Blvd.
Azusa, CA 91702
1
City of Banning
99 East Ramsey Street
Banning, CA 92220
City of Burbank
164 W. Magnolia Blvd.
Burbank, CA 91502
City of Colton
150 S. 10th Street
Colton, CA 92324
City of Glendale
141 North Glendale Ave.
Level 4
Glendale, CA 91206
City of Pasadena
150 South Los Robles Ave.
Suite 200
Pasadena, CA 91101
City of Riverside
3900 Main Street
Riverside, CA 92522
City of Vemon
4305 Santa Fe Avenue
Vernon, CA 90058
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EXHIBIT F
'WORK COORDINATION
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EXHIBIT F
'WORK COORDINATION
'VORK COORDINATION
Commission's point of contact shall be as follows:
Name: David E. Luttrell
Address: 8881 E. Sutton Drive
Scottsdale, AZ 85260
Telephone Number: (602) 860-4219
Fax Number: (602) 860-4473
Auditor's point of contact shall be as follows:
Name: Milton H. Thackeray
Address: KPMG Peat Marwick LLP
60 East Temple, Suite 900
Salt Lake City, DT 84111
Telephone Number: (801) 237-1216
Fax Number: (801) 237-1552
Reclamation's point of contact shall be as follows:
Name: Clark Newby
Address: Lower Colorado Regional Office
400 Railroad Avenue
Boulder City, NV 89006
Telephone Number: (702) 293-8550
Fax Number: (702) 293-8017
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ATTORNEY
GENERAL'S
OFFICE
LAS VEGAS.
NEVADA
-'1:iloo-
Q-404Z-"'T.l1
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[ MAY 2 4 1995 .
O[~J;~; c'~J;;~i ~;~T~~'-
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CONTRACT
FOR
PROFESSIONAL AUDITING SERVICES
1.
THIS CONTRACT is made this
6th
June
, 1995,
day of
between the COLORADO RIVER COMMISSION OF NEVADA, created by and existing
pursuant to Nevada Revised Statutes (NRS) 538.041 to 538.251, inclusive, hereinafter referred
to as the "Commission", acting in its own behalf and on behalf of the State of Nevada, and
KPMG PEAT MARWICK LLP, hereinafter referred to as the "Independent Auditor";
sometimes each is referred to individually as "Party" and collectively as "Parties".
EXPLANATORY RECITALS
2.
\VHEREAS, NRS 284.173 authorizes elective officers, heads of departments,
boards, commissions or institutions to engage, subject to approval of the State Board of
Examiners, the services of persons as independent contractors; and
WHEREAS, the Commission, on its own behalf and on behalf of the State of
Nevada, entered into a contract with the Department of Energy, Western Area Power
Administration, hereinafter referred to as "Western", and the Department of Interior, Bureau
of Reclamation, hereinafter referred to as "Reclamation", for the purchase of electric service
from the Boulder Canyon Project, hereinafter referred to as the "Electric Service Agreement";
and
WHEREAS, the Commission and the other fourteen entities contracting for
Boulder Canyon Project power in the states of Arizona, California and Nevada, hereinafter
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referred to collectively as the "Contractors"l and individually as a "Contractor", have entered
5
into the Boulder Canyon Project Implementation Agreement with Western and Reclamation,
hereinafter referred to as the "Implementation Agreement", which among other things,
authorizes an independent initial audit of Boulder Canyon Project books and records,
hereinafter referred to as the "Initial Audit"; and
WHEREAS, the Commission has been selected by the Contractors and has
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agreed to serve within the limits of this contract and the "Agreement Relating to the Initial
Audit among the Boulder Canyon Project Contractors pursuant to the Boulder Canyon Project
Electric Service Contract and Boulder .Canyon Project Implementation Agreement," as the
contracting party responsible for contracting with an auditOr to perform the Initial Audit; and
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\VHEREAS, pursuant to section 17 of the Electric Service Agreement and I
section 15.2 of the Implementation Agreement, the Contractors, have authorized the I
Commission to enter into this contract and have each agreed ill writing to pav their I
- - J I
proportionate share of the Initial Audit; and
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WHEREAS, the services of the Independent AuditOr specified herein are both
necessary and desirable and in the best interest of the State of Nevada; and
WHEREAS, the Independent Auditor desires to furnish these services and hereby
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represent~ that it is qualified to render ~e services hereinaft~r described;
NO\V, THEREFORE, in consideration of the mutual covenants contained herein,
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the Parties hereto agree a~ follows:
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IThe Contractors for Boulder Canyon Project electric service are the Arizona Power Authority,
Colorado River Commission of the State of Nevada, Cicy of Boulder City, Department of Water and
Power of the Cicy of Los Angeles, The Metropolitan Water District of Southern California. Southern
California Edison Company. Cicy of Anaheim, Cicy of Azusa, Cicy of Banning, Cicy of Burbank. City
of Colton, City of Glendale, Cicy of Pasadena, Cicy of Riverside and City of Vernon.
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ATTORNEY
GENERAl..'S
OFFICe:
LAS VEGAS.
NEVAOA
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ATTORNEY
GENERAL'S
OFFIC.E
I...AS VEGAS.
NEV....OA
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WORK TO BE PERFORMED
3.
The Independent Auditor agrees to provide all services and to furnish all
deliverables, described in Exhibit A within the times shown in Exhibit B, both attached hereto
and made a part hereof.
MANNER OF PERFORMANCE
4.
During performance of the services described in Exhibit A, the Independent
Auditor must at all times:
(a)
Act in the interest of the Commission and the other Contractors, when
dealing with Western, Reclamation and third parties in relation to the performance of those
serVIces.
(b)
Maintain direct supervision and control of the Independent Auditor's
officers, employees, agents, subconsultants, and subcontractors used to perform the work
described herein and, upon notice from the Chairman of the Commission, hereinafter referred
to as the "Chairman ", cease to use any personnel specified by the Chairman as being
unsatisfactory .
(c)
Produce work in a manner and a quality usual to the [mancial auditing
profession.
OWNERSHIP OF DATA AND DOCUMENTS
5.
All reports, studies, research documents, and data received or obtained by the
Independent Auditor in .relation to the work herein, shall become the property of the
Contractors and shall be delivered to the Commission upon termination of this contract. The
Independent Auditor may make copies thereof, the cost of such copies to be borne solely by
the Independent Auditor, and use them if such use is not contrary to the interests of the
Contractors as determined by the Contractors.
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.......OllNEY
C:;E:NERAL"S
OFFICE
~^$ ve:G...\S.
NEVAOA
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COMMENCEMENT AND COMPLETION OF WORK
6.
The Independent Auditor shall commence the work described herein upon receipt
of written notice from the Commission to proceed and shall diligently pursue the work and
shall complete the work an~ achieve miles~one dates in accordance with the schedule set forth
in Exhibit B.
PRINCIP AL EMPLOYEES
7.
(a)
Officers and employees of the . Independent Auditor or any agent,
subconsultant or subcontractor to the Independent Auditor, performing services hereunder shall
consist only of those persons specifically identified by name as part of the Project Team in
Exhibit C, attached hereto and made a part hereof, or such other persons approved in advance I
in writing by the Chairman.
(b)
Time charged to the Initial Audit by each individual performing work
hereunder shall not exceed the estimated project hours listed in Exhibit C for that individual
by more than ten percent (10%) without approval of the Chairman.
COMPENSATION FOR SERVICES
8. (a) The Independent Auditor shall render the services and shall furnish the
deliverabies required hereunder for a not-to-exceed cost of $583,581.00. I
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(b)
The Independent Auditor shall separately bill each Contractor for its
proportionate share of the Initial Audit based upon the percentages set forth in Appendix D,
attached hereto and made. a part hereof, and the billing procedures established herein. The
Contractors have entered into an agreement among themselves entitled "Agreement Relating
to the Initial Audit among the Boulder Canyon Project ContractOrs pursuant to the Boulder
Canyon Project Electric Service Contract and Boulder Canyon Project Implementation
Agreement" J hereinafter referred to as the "Contractors' Agreement" which is attached hereto
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AriOANEY
GENERAL-OS
OFFICE
LAS VEGAS.
....(VAOA
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as Exhibit G and hereby made a part hereof, which obligates each Contractor to pay to the
Independent Auditor its proportionate share as shown in Exhibit D.
(c) The Independent Auditor agrees that it shall be solely responsible for the
collection of monies' due and payable by each Contractor to the Independent Auditor for
services rendered hereunder. The Independent Auditor understands and expressly agrees that
the Commission shall not be held responsible for delinquent payments or failure to pay by any
Contractor, other than for the Commission's proportionate share of the Initial Audit as'
provided for in Exhibit D, and that the Commission shall not be responsible to undertake or
assist the Independent Auditor in any activities that may become necessary in order for the
Independent Auditor to collect amounts owed to the Independent Auditor by Contractors other I
than the Commission. I
(d) The Independent Auditor shall not seek reimbursement from any
Contractor other than from the Contractor who has failed to render payment, for any costs
incurred by the Independent Auditor to collect the delinquent amount from the Contractor who
has failed to render payment hereunder.
BILLING PROCEDURE
9.
(a)
On the second working day of each month commencing on the month
after the effective date of this contract, th~ Independent Auditor shall prepare a written monthly
statement entitled, "Invoice for Services Authorized Pursuant to Section 17 of the Boulder
Canyon Project Electric Service Agreement and Section 15.2 of the Boulder Canyon Project
Implementation Agreement" for work performed hereunder during the four weeks ended prior
to the end of the previous month, except that the monthly statement for December 1995 shall
be .for work performed hereunder during the six weeks ended prior to the end of the previous
month. Each monthly sIatement shall contain a properly itemized invoice setting forth the
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LAS VEGAS.
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amount due and payable by the Contractor as detailed herein and a progress report as required
by Exhibit A hereto.
(b)
The Independent Auditor shall initially provide each monthly statement
to the Commission. Upon receipt of a monthly statement from the Independent Auditor, the
Commission, acting through the Chairman or the Chairman's authorized representative, shall
review the invoice contained in the monthly statement according to the standards provided in
subsection (c) and, if acceptable to the Commission, thereafter forward'the monthly statement
to the Contractors for review in accordance with the Contractors' Agreement. If the
Contractor expresses concerns regarding the invoice contained in the monthly statement, the
Commission shall in accordance with subsection (c), consider such concerns in its decision to
approve or reject the rnonthly invoice.
(c)
The Commission shall be permitted to reject an invoice if:
(i)
it does not properly reflect a Contractor's proportionate share of
the cost of the Initial Audit;
(ii)
(iii)
it is not properly itemized in accordance with subsection 9(d);
it contains costs or amounts improperly charged to the
Contractors by the Independent Auditor; or
(iv)
it otherwi~e does not meet the requirements of this contract.
(d)
A properly itemized invoice must include identification by name and
position of each person's Jime and quoted hourly rate, plus a tabulation of out-of-pocket costs
by purpose and type. Out-of-pocket costs shall include only those costs directly and
exclusively attributable to the aforementioned services and do not include any general overhead
of the Independent Auditor normally included in quoted hourly rates. Out-of-pocket costS
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ATTORNEV
GENERAL'S
OFFICS:
l..AS VEGAS.
NEVAOA
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include travel and subsistence away from the Independent Auditor's office, long distance
telephone calls, computer and reproduction services, except that the amounts for travel and
. subsistence must not exceed the amounts for such expenses allowed for employees of the State
of Nevada under the Nevada Revised Statutes.
(e) If a montWy invoice is rejected by the Commission, the Commission shall
immediately notify the auditor of the rejection and the basis for the rejection. The Independent
. Auditor shall therefore prepare and forward to the Commission a revised invoice for review
which shall also be subject to the review of the Contractors in accordance with subsection (b).
(f) Upon the completion of the review process described in subsection (b)
and subsequent approval of a monthly invoice by the Commission, the Independent Auditor
shall submit a montWy statement to each Contractor for that Contractor's proportionate share
of the total amount of the Commission-approved invoice at such Contractor's designated
address as set forth in Appendix E, attached hereto and made a part hereof.
(g) The Contractors' Agreement provides that payment is due from each
Contractor within thirty (30) calendar days after receipt of a Commission-approved. monthly
statement.
(h) The Independent Auditor agrees to keep such records and accounts as
may be necessary in order to record complete and accurate entries as to personnel hours
charged and any expenses for which the Independent Auditor expects to be reimbursed. These
books and records must be available for examination and audit by the Commission, the State
of Nevada Attorney General, the State of Nevada's Legislative Auditor and other designated
representatives of the Contractors. Such books and records shall be kept for a three (3) year
period following the termination of this contract.
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ATTOANEY
G~NE:A:^L.S
OFFICE
LAS VEG....S.
NEVAOA
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TERMINATION
10.
(a)
This contract shall terminate on February 28, 1996, unless extended in
writing in accordance with section 15. The Chairman may, however, terminate this Contract
for any reason upon giving ten (10) calendar days' prior written notice to the Independent
Auditor.
(b)
If this contract is terminated for reasons other than default by the
Independent Auditor before the work is completed, the Contractors' only obligation will be for
payment of services actually performed by the Independent Auditor up to the effective date of
the termination, including such costs and expenses as may be necessarily incurred to effectuate
the termination.
(c)
If this contract is terminated before the work is completed, the
Independent Auditor shall deliver to the Commission all completed work and work-in-progress
as of the effective date of the termination including reports, studies, research documents, and
data.
INSURANCE
11.
During the term or this contract, the Independent Auditor and all subconsultants
or subcontraCtors to the Independent Auditor shall maintain insurance with insurance companies
acceptable to the Chairman as follows: ,
(a)
Worker's Compensation Insurance covering employees of the Independent
Auditor and its subconsultflnts and subcontractors under applicable state law where services are
rendered. The Independent Auditor shall furnish to the Chairman of the Commission a
certificate of the insurer certifying that the Independent Auditor has complied with the
provisions of applicable state(s) worker's compensation insurance starutes.
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GENERAL'S
OFFICE
LAS VEGAS~
NEVAOA
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(b) Automobile Iniury Liability and Property Damage Liability Insurance
covering automobiles owned, hired or used by the Independent Auditor and its subconsultants
and subcontractors with limits not less than the following:
Bodily Injury
$500,000 each person
$1,000,000 each occurrence
$1,000,000 each occurrence
Property Damage
The policy must name each individual Contractor as additional insureds.
(c)
General Liability Insurance naming the Independent Auditor and its
subconsultants and subcontractors as the insured with limits of liability as follows:
Bodily Injury
$500,000 each person
$5,000,000 each occurrence
The policy shall be endorsed to provide "broad form property damage" or such similar
name each individual Contractor as additional insureds.
(d)
Contractor from liability for errors and omissions committed by the Independent Auditor and
its subconsultants and subcontractors while performing the services required under this contract
with a $5,000,000 limit.
(e)
Within fifteen (15) calendar days after execution of this contract by the
Commission, the Indepel1dent Auditor shall provide the Chairman with evidence that the
foregoing insurance is in effect. The Independent Auditor shall notify the Commission
Chairman thirty (30) calendar days before cancellation or material changes of any such
cQverage.
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GENERAL.'S
OFFICE
LAS V'&:GAS.
NEVAOA
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INDEMNIFICATION
12.
The Independent Auditor agrees to hold harmless, indemnify and defend each
individual Contractor and their respective officers, directors, employees, agents, successors or
assigns, from any claims, demands, costs, losses, cause of action, damages or liability, of
whatsoever kind or nature, resulting from errors or omissions in the Independent Auditor's
performance of work under this contract by, or any unlawful or tortious act of, the Independent
Auditor, its agents or employees. The Independent Auditor agrees to require all subconsultants
and subcontractors performing work under this contract to hold harmless, indemnify and defend
each individual Contractor to the same extent.
NOTICES
13.
Notices related to or given pursuant to the provisions of this contract or which
are necessary to carry out its provisions must be in writing and delivered personally to the
person to whom the notice is to be given or sent by either registered , certified or express mail,
postage prepaid, to that person. The Parties' addresses for this purpose are respectively:
To the Commission:
Ms. Janet Rogers, Chairman
Colorado River Commission
To the Independent Auditor:
555 East Washington Avenue, Suite 3100
Las ,Vegas, Nevada 89101
Mr. Milton H. Thackeray, Partner
KPMG Peat Marwick LLP
60 East South Temple, Suite 900
Salt Lake City, Utah 84111
or to such other address as one Party may designate to the other in writing.
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GENERAL'S
OFFIC!t
'-AS VEGAS.
NEVADA
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WORK COORDINATION
14.
The Independent Auditor's points of contact with the Commission, Reclamation
and Western on all matters related to the technical performance of the Initial Audit shall be as
provided if!. Exhibit F, attached hereto and made a part hereof.
AMENDMENTS
15.
(a)
This contract and the attached exhibits constitute the entire agreement
between the Parties and, except as provided in this section, may be amended by the Parties in
writing only if approved by the Commission and the Nevada State Board of Examiners.
(b)
Any change to this contract or an exhibit thereto which results in. a
reduction in the compensation due the Independent Auditor or does not increase the not-to-
exceed amount provided for in section 8 may be approved by the Chairman.
JURISDICTION
16.
Except as otherwise provided herein, the law of the state of Nevada shall govern
the interpretation of this contract.
CONFLICT
17.
In the event of a conflict between the terms and conditions of this contract and
any exhibit or document attached hereto or referenced herein, the terms and conditions of this
contract shall govern,.
ASSIGNMENT
18.
The Independent Auditor shall not assign, transfer or delegate any rights,
obligations or duties under this contract without the prior written consent of the Chairman.
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GENERAL.'S
OFFICE:
\..AS VEGAS.
NE;VAOA
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HEADINGS
19.
The section headings in this contract are intended for convenience only and must
not be taken into consideration in any construction or interpretation of this contract or any of
its prov~sions.
WAIVER
20.
Any waiver at any time by any Party hereto of its rights with respect to default
or any other matter arising under' or in connection with this contract shall not be deemed to be
av.:aiver with respect to any subsequent default or matter.
EFFECTIVE DATE
21.
This contract shall become effective when executed by both parties and it is
approved by the Nevada State Board of Examiners.
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1 IN WITNESS WHEREOF, the Parties hereto have executed this contract on the day
2 and year first above written.
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ATTORNEY
GENERAL'S
O....'CE
1.....5 VEGAS.
NEvADA
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Attest
By ~/,v"/L-4 C~ Y5r~
j\~!~st
-.~.
:;>S'\~_~7y
)
Approved as to form:
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BY.'?'? . e-;r
Mari . Bachanis
Deputy Attorney General
COL~~O R11VER CO~/SSION
ii'!:j(~ /,
By/141ft) ?$~ /t to.!Z
J.Ta;et Frasier Rogers /'
Chairman
KPMG PEAT MARWICK LLP
Ratified and approved this ~ day of
~ ,1995,'
STAlE BOARD OF EXANIINERS
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EXHIBIT A
SCOPE OF WORK AND DELIVERABLES
EXHIBIT A
SCOPE OF "VORK A]\T)) DELIVERABLES
SCOPE OF ';YORK
Jntroduction
Tne following paragraphs describe the proposed procedures we plan to perform to accomplish the
objectives for each of L.~e 16 tasks outlined in the RFP to provide professional services fo;: the Initial
Audit of the Boulder Canyon Project (Project). 1'1 addition to an executive SUtTL.-nary, we win report on
each of the tasks in separate sections as required by the RFP. Our revort will describe u1e ::>rocedures
, performed, the data gathered and examined, our findings and conclusions, and recommer:cations, and
\vill include foomotes and/or appendices documenting information SOUIces.
Our work will be performed in accordmce 'With GAGAS for performance and fin:mcial related auditS.
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. Tne procedures omlined below ar'e t..1e general procedures we believe are appropriate co meet the
objectives outlined in the RFP. We will meet with t.l-}e audit cornrnirree or representatives mG review Lhe
detailed procedures to be performed prior to commencing fieldwork at the Project offices. The progra.l1
will be modified as a1Jorovriate based on feedback received 2.rld the fi..,dirl!Zs and issues e:lcoumered
dlli-hig the course of t.l1e> audit. -
Also, we would hope to meet Wiu.1 each of the Cona-actOrs du..-ing the engage:nem in orde~ to consider
other questions and concerns they may have.
~rocedure5.
1. Internal Fiscal Control
Review authori..z:ing legiSlation for th,e Project, including:
Boulder Cmyon ProjeCt Act dared December 21,1928
Boulder Canyon Project Adjustrnem Act of 1940
Hoover Power Plmt Act of 1984
Using the documentation previously generated in connection with. our CFO auditS of the Project,
expand and fun:her document our understanding of the fisc;ti comrols employed by "\Vestern and
Reclamation (the Agencies) inc~uding budgeting, procurement, COSt accumulation, a.'1d cost
allocation, as necessary to evaluate the Agencies' Systems' capability to meet '-t1e uprating
objectives set forth in the Implementation Agreement's Ten Year Plm (u.1e Plm).
Document and assess the proce~ures used by Western and Rec!a..l1adon to ensure u12.t appropria~e
budget, financial management, and power marketing personnel maintain an adequate
undersumiing of the signific::.nt fucal requirements of the project.
Review any relevant DOE-OIG and De'Danmem of Imerior (DOI) Office of L'1s"Ce~tor General
revons that 'Certain to the internal fucal conrrols of Westem a..'ld Recl:L"TIarlon. De:e:::-ine :rre:lS of
we3....'<ness wd the adequacy or management's action plans to resolve such \veaknesses.
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2. Accuracv of Source Documents.
Determine the 10cation of original source documents supponing transactions and entries affecrin!Z
accountS at Reclamation and Wesiern including contracts, purchase orders and invoices time
sheets, and internally generated results of operations repons. Documem the loc:ltion of such
information and note potential problem areas due to inaccessibilily of such supponing
information.
Obtain copies of (or access to) tJle detailed disbursement repons utilized by Western (213 wod:
order cost posting repor;:) and Reclamation (BaR 590 cost postings repo!! by cost aut..1ori::-j) for
the period June 1, 1987 to September 30, 1994.
Identify u1e foilowiilg items from u"le above reports for Westem and Rec12....llation:
The work orders or cost aut..1oriries th~t pertain to the Projecr
Object codes applicable to purchases arId payroll costS
Consider rescitS of addition::l teSi work en fmzJJ.cial statements.
Using the above re~)Qrl.S, select a sample of purchases charged to the Projecr for r.h.e pericd June 1,
1987 to September 30, 1994. Obtain r~lar.ed supponing documenca.ion, including purchase
orders, original i.i1Voices, bla.'l.i;:et purcnase agreements, conscruc:icn comr?cts a..-:d travel
vouchers. Exwirle such supponing documentation to ensure that purc::.ases an.d other related
costs char!Zed to r.r,e ProJ"ect are fer Ll1e benefit of the Project. NOte: if s-..moorti!1cr docureem.::.tion
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for earlier periods is inaccessible, re" l~oc.::.te s2Jnple to late~ ye:LTS, as ccr:sicered appropri:!.te. For
sample items pertzining to cons~cn~n conm.Cts, we will focus ~n pe~ods (months or yem)
which aope:>.r to have U11USU:ll costS g1ven our current undersranamg cr exuec::ed consrruc:ion
activity"related to u1e uprating project, the Visitors Facilities, a..'1d L~e general replacemems
program.
For payroll rransac:ions, select a sample from selected pay periods u1rCU~1out the pericd jur;e 1,
1987 to Se~tembe:: 30, 1994. For each transaction selected, obtain re~3.ted source documems.
such as u'le Time a.."1d A((enda.'1c~ Ref:~rt, E:nployeet~ Applica~on for Leave (if applicable)~
Reauest for Authoriz31ion of Over-wIDe (ll applicable), Tunekeeper s Tir.:e a.-;d Attendar.ce Re::Jor.:
and' persor,nel fJe. Review such source documentation to de~ermine ac::'J.....-acy and applic:!biliry of
payroll charges tOu.1e F7oject.. Note: If suppo~ing docume~taticn for e:.rlier periods is
inaccessible, reW0C3.te sa...-nple (0 larer years, as consldered appropnare.
oJ.'
Chan the r10w of internal concrol processes documented in Task i'io. 1 begi..nnL"1g wit..' the
initiation or a cran.sacrion throu~1 itS impact on financial reporting.
Prepare a comorehensive schedule of all reports generated by Western 2..'1d Reclamation that
provide operational and financial information on the Project that may be useful in meeting tile
reoorOnO' oOJoectives of u~e Plan.
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Review Project fmancial arld operational data currently being provided to the Contractors.
Determine areas for improvement in consideration of the following:
Internal controls documented in Task No.1
Flow charted information noted above
Requirements of the Ten- Y elf Plan (the Plan)
Caoabilities of existh"1g systems
MUlti-projeCt costS, replacements, other as appropriate
1"1 consideration of the above, ma.."e recommendations as to how Western and RecIam:!.tion
fInancial manasement sysre:r:s should be modified in order to meet the objectives of the Plan.
Also, see Tas:( No. 12 and consideration of information flows L'1 overall coordination of
budgeting, rate:naking and reconciliation fwncTIons.
4. ProieCt FinaJlcial StatementS
Note: As exoiai1"1ed i1"1 the Rt7, the financial statements of u~e Project we:-e audited as or ;\fav
31, 1987 by. 2...11 independem CPA firm. An independent fina.l1cial statement audit was GOt
conducted again until 1993. Western,ho\vever, has compiled fmanci21 statements for u1e Projec~
using "Results of Ope::iltions" repolLS generated by Reclamation a.'1G itself for inclusion L'1 its
combined Po\;'er Syste::1 an..i'1ual report u1.rough 1994. The Salt La..'<e City office of KP~IG was
contracted by the DOE-OIG to perform audits of the fmancial statements of the Project for the
years ended September 30, 1993 arld 1994.
Submit the fina..lcial st::lemems of !.t1e Project for the years ended September 30, 1993 CL.~d 1994 to
a quality revie'.v. Clli-1s JOhIIS, senior manager and utility industry siJec:ialist located in the St.
Perersbm2:, Florida K?~{G c~-;;'ce, ';:,ill conduct the review. ~
Obtain the Results of Operadons repom from both Western and Recla.rn::.rion fer the ceriods
ended September 30, 1987 through 1992 and perform the following, as dee::i.ed necess2r'j:
Revie\v L1e fina:."1ci::!.l i,;-:formanon for consistency between ye:rrs and with the a~dited
fmanci::.! st3.teme~tS for u1e ye::...--s ended September 30,1993 a.'1d 1994.
Agree significant accoc::t bal::.n.ces to supporting getail subsidia..:7 leege::s
5. Operatinc; and Worh"l2' Cap::::.! Funds
The ooeratin2: a..'1l0unt as of Se:Jtemc.er 30, 1993 was stipulated in the ImoIemem:!.ncn .~,"\!reemem
to be~ $7,879,819. Obtain unde:standing of how the amount waS determined. -P..eview
reasonableness of aooroacn. We will calculate (rollforward) the overarin!:: a.rnoum and wcrkinO'
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caoital fund as of Seutember 30, 1994 by perrornung the following SLeOS:
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(a)
Quamifv and Vil.,-h~' the revenues collected by Western and tr3.nsfe:red to Recla..'":1aticn
dur.ng :b ye'2.:: ended SFe~e:nber 30, 1994. Ensure that u~e Age::cid records agree.
(b)
QUl.L.l:-=~ u'1e expenc:-c:res for the ye:lf ended September 30, 1994.
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(c)
Determine and include amounts billed by Western but not collected at September 30,
1994.
(d)
Determine and include amounrs collected by Western but not transferred to Reclamation at
Septemoer SO, 1994
(e)
Quantify and reduce the balance by undelivered orders (obligations) at September 30,
1994. .
The sum of these amounrs equate to the adjusted operating amount for the Project. In addition
th.is ,amount less the undelivered orders (obligations) represent the worki.l1g capital balance. '
Compare the adjusted operating amount and working capital account to the ~l1ount reooned bv
Reclamation in their generalledger. . .
Determine Lie portion of the operating amount advanced to ReclaLl1anon from the Con~ci:Ors.
6. 0ri~al hnbalance
The Imnlementation Agreement requires Western to calculate the orig=..na! i.1}oahnce accumub.:ed
during: the period from June 1, 1987 through September 30, 1994. Imervie..... Western's "DOWer
markeri.ng: depanment to determine the pro~dures and reportS used to 2.Ccmmt for and accumulare
capacity and energy paymenrs for power delivered from the Project for 6e appliC3.ble period.
Test the accuracy of the reportS generat~d by the system by selecri.'g a S2..TTIple of power billings
and a fTTeeinO' them to sour~ documenranon. .
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Usin 0' the reoortS indicated above, independendy calculate the "Original L-nbalC-!'i.ce" in accorGC-!"1ce
with ilie proVisions set forth in sections 4.31 and 13.9 of the Implementation Agreement.
Comnare Western's c:llculation or the Origi.nal Imbalance wiui u1e result of our ca1c:llarion. and
inves'rigate aIIY differences. '
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AmountS 2.i"1d Tvoes of CostS Cl12I2:ed to the Project
Using: Resulrs of Operations repcns, Power Repayment Study Spre2.dshee~s (PRSS), C-!1d cu1er
in{e~al financial reportS generated by v.: este.m and Reclamation, prepare an C-!1alysis of cpe:-;l!ion
and maimenance (O&M) costS, multI-prOJect, and replacement costS for the periods ended
SeptembeJ:' 30, 1987 u1rough 1994. Compare costs on a year-to-ye2I basis. '
Identify unusual fluctuations berween yeats. In consideration of flucru.ations nored herein and
resultS of procedures performed in Task No.2, determine whether additional tr.illsaction testing: is
appropriate (performance or additional test work will nor be considered unless significant
concerns are noted).
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