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Home My WebLink About25I - AGMT - CABLE AUDIT SRVSREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: JULY 2, 2012 TITLE: AGREEMENT AMENDMENT WITH COMMUNICATIONS SUPPORT GROUP FOR CABLE AUDIT SERVICES CITY MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ? As Recommended ? As Amended ? Ordinance on I" Reading ? Ordinance on 2nd Reading ? Implementing Resolution ? Set Public Hearing For CONTINUED TO FILE NUMBER Authorize the City Manager and Clerk of the Council to execute the attached amendment to agreement with Communications Support Group for cable audit services in an amount not to exceed $20,000, for a total not to exceed amount of $98,000, subject to non-substantive changes approved by the City Manager and City Attorney. DISCUSSION On January 25, 2011, the City entered into an agreement with Communications support group to perform a cursory franchise fee and specialized Public, Education and Government (PEG) fee review of both Time Warner Cable (TWC) and AT&T California (ATT). This Phase 1 review was designed to better understand how both companies have been remitting franchise fees and PEG fees and determine if there was potential to recover additional unpaid fees. Phase 1 was also intended to provide information to the City that would assist in determining the costs and benefits of proceeding with a full audit. The cost for Phase 1 of the project was $18,000. On June 23, 2011 Communications Support Group submitted a preliminary procedures review that addressed the findings in Phase 1 of the project. This report lists estimated unpaid franchise fee revenue of $77,000 and estimated unpaid PEG revenue of $427,000. These amounts are one time monies that are in addition to the quarterly franchise fees and PEG fees that are remitted to the City. To confirm these cursory estimates staff recommended a full audit of TWC and ATT (Phase 2). On August 1, 2011, the City amended the agreement to complete Phase 2 of the audit. Phase 2 included a full three-year audit of TWC and a one-year audit of ATT. In Phase 2 the estimated findings in Phase 1 were revised to $21,761 in unpaid franchise fee and interest and $495,720 in unpaid PEG fees ($517,481 total). On May 16, 2012, the City mailed TWC a Request for Payment in the amount of $517,481 and is working with TWC to clarify any questions related to the audit findings and facilitate payment. 251-1 Communications Support Group Agreement July 2, 2012 Page 2 This second amendment includes an additional $5,000 for additional detailed work that was needed to prepare the TWC Request for Payment and prepare for meetings with TWC. This amendment also includes a $10,000 contingency for Phase 2 support as we continue to work towards collection of the $517,481. Also included in this amendment is an additional $5,000 for completion of the ATT one-year audit, for a total amendment amount of $20,000, and a total not to exceed agreement amount of $98,000. Franchise fees are fees paid into the General Fund and PEG fees are fees paid into Fund 21 and restricted for PEG capital and equipment purchases. The City receives approximately $1,175,000 in franchise fee annually. The City projects approximately $232,000 in PEG fees annually. FISCAL IMPACT Funds for this agreement are available in the PRCSA Administrative Services contract services account (no.01113200 62300). Gerar o Mouet, Execu ive Director Parks, Recreation and Community Services Agency APPROVED AS TO FUNDS AND ACCOUNT: Francisco Gutierrez, Executive Director Finance and Management Services Agency 251-2 SECOND AMENDMENT TO AGREEMENT THIS SECOND AMENDMENT TO AGREEMENT is entered into on July 2, 2012, by and between Communications Support Group, Inc., a California corporation ("Consultant") and the City of Santa Ana, a charter city and municipal corporation organized and existing under the Constitution and laws of the State of California ("City"). RECITALS: A. The parties entered into that certain Agreement N-2011-012, dated January 25, 2011, (hereinafter "said Agreement") by which Consultant has provided cable television/video provider franchise audit services. B. The parties executed Amendment to said Agreement, A-2011-195, dated August 1, 2011, to include a full franchise audit, and increase compensation to pay for audit services. C. When Consultant commenced the audit of AT&T's franchise and PEG fees, Consultant was informed by AT&T that several quarters of data had been lost in the AT&T system, resulting in delays and added costs while Consultant worked with the franchisee to determine an audit method based on extrapolated data. D. Consultant has completed the audit of Time Warner franchise and PEG fees and has been requested to provide expert support to the City in the collection of unpaid franchise and PEG fees. E. In accordance with the terms and conditions of said Agreement, the parties wish to amend the Scope of Services and increase compensation to pay for the additional services provided. WHEREFORE, in consideration of the covenants contained in said Agreement, and subject to all the terms and conditions of said Agreement, except those amended in this Second Amendment to Agreement, the parties agree as follows: 1. Section 1, SCOPE OF SERVICES, shall be amended to provide that Consultant shall complete the franchise fee and PEG fee audit of AT&T, and provide support in City's collection from Time Warner of unpaid franchise fees and PEG fees, as set forth in Exhibit A attached hereto and incorporated by this reference. 2. Section 2, COMPENSATION, shall be amended to increase compensation by $20,000, to pay for the additional services as follows: a. Prepare Time Warner franchise fee and PEG fee audit findings to support the City's collection of unpaid fees, for a not to exceed amount of $5,000; and b. Provide administrative and expert witness support in City's collection of unpaid Time Warner franchise and PEG fees in a not to exceed amount of $10,000; and c. Complete agreed-upon procedures review of AT&T franchise fee and PEG fees for a one year period for an amount not to exceed $5,000. 251-3 The total amount for audit services provided under said Agreement shall not exceed $98,000.00 during the term of said Agreement. 3. Section 4, TERM, shall be amended to extend the term through June 30, 2013. 4. Except as hereinabove amended, all terms and conditions of said Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to Agreement on the date and year first written above. ATTEST: MARIA D. HUIZAR Clerk of the Council APPROVED AS TO FORM: SONIA R. CARVALHO City Attorney By: Laura Sheedy Assistant City Attorney CITY OF SANTA ANA PAUL M. WALTERS City Manager COMMUNICATIONS SUPPORT GROUP, INC. JOHN RISK President 251-4 EXHIBIT A SCOPE OF SERVICES Time Warner Franchise Audit and PEG Audit Consultant shall provide, at the request of the Santa Ana Parks, Recreation and Community Services Agency, advice regarding the preparation of City's Request for Payment of unpaid franchise and PEG fees. Such advice shall include preparation of reports necessary to substantiate the City's claim for unpaid fees, meetings with the franchisee to explain the audit process and findings, and audit recalculations which may be necessary as a result of additional information provided by the franchisee. Audit services shall be paid at the rate of $200.00 per hour. Additionally, Consultant will provide expert witness services if the City is required to initiate collection procedures against Time Warner for the franchise fee or the PEG fees. Expert witness services shall be paid at the rate of $285.00 per hour for time spent at mediation or arbitration hearings, including production of documents pursuant to subpoena, and depositions, and $300.00 for time spent at trial. In addition to the consultant's hourly charges for services, Consultant will charge for all out-of-pocket costs incurred including, but not limited to, overnight mail charges, copying services at cost, and administrative assistant services at an hourly rate not to exceed $60 per hour. For matters such as preparation of exhibits, posters, or slideshows requiring outside printing or graphic services, CSG will bill costs plus 10%. Refined/modified spreadsheets, provided at the request of City, will be provided on a time and materials basis. AT&T Franchise Audit and PEG Audit Consultant has substantially completed the audit of AT&T's PEG support obligation. However, Consultant will input actual subscriber counts into the AT&T PEG liability spreadsheet in order to arrive at a calculation of PEG fees due from AT&T. Consultant will prepare a report of findings regarding the PEG fees owed by AT&T which may be utilized by City in any necessary collection proceedings against AT&T. Consultant will continue to audit AT&T franchise fees for the 2009 audit period. Consultant will complete the franchise fee audit and deliver to City a report of findings regarding franchise fees pursuant to DIVCA. Services provided to complete the AT&T franchise and PEG audit will be at the direction of the Santa Ana Parks, Recreation and Community Services Agency. Services provided in relation to the AT&T audits will be billed at the rate of $200 per hour. 251-5 251-6