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lj , City of Redwood City, California Response to Request for Proposal For Overhead Cost Allocation Plan Introduction Cost Allocation in California The City of Redwood City is soliciting proposals from qualified consulting firms to prepare annual City-wide Overhead Cost Allocation Plan cost allocation plan. The cost allocation plan is used to determine costs of support service departments to specific beneficiaries of those services. The City, and all other jurisdictions in California, follows the guidelines contained in the federal circular OMB A-87 guidelines. Benefits to users of the cost plan are: .:. Federal and state grant reimbursements .:. Determination of full costs for external charging (user fees) .:. Knowledge of full costs (lease/buy decisions, outsourcing, etc.) Cost allocation plans are allocation analyses, not documents completely structured according to specified auditing processing. Cost allocation plans follow the general guidelines contained in OMB A-87 to determine appropriate charges in a "fair and equitable manner." The analyst has some latitude in the documentation within the overall guidelines. The State Controller is the cognizant agency for approving and auditing cost allocation plans in California to assure quality and conformance to both federal and State guidelines. Cost Allocation in Redwood City, California From the RFP description, it appears that the City is looking for a so-called "OMB A-87" cost allocation plan. This is the type of plan that local agencies are required to prepare if they plan to use the plan for federal grant purposes or for state mandated cost reimbursement claiming in California. There is also a variation of that type of plan which is called a "Full Cost" cost allocation plan. This type of cost allocation plan captures additional costs that are legitimate to allocate to receiver departments and enterprise funds. Full cost plans are still based on OMB A- 87 principles, but they provide a mechanism for more fully and accurately spreading the City's central service costs throughout Redwood City. Our firm is fully versed with both types of plans, and will offer options for both types of plans in the professional fees section of this proposal. In the simplest of terms, the City has requested the following project deliverables: .:. An annual OMB A-87 compliant indirect cost allocation plan that meets the following criteria: III The plan will be provided in hard copy and electronic format. A cost allocation plan that easily adapts to a range of activities both simple and complex. III III A methodology that will allow the City to continuously update the model and overhead cost allocation plan from year to year as the organization changes. MGT Of AMEIlie"", INC