REPORT TO COUNCIL
SUBJECT
Title
Action to Approve and Authorize the City Manager to Execute Amendments to Reinstate and Extend Terms of Agreements with Raftelis Financial Consultants, Inc. and Baker Tilly Advisory Group for Organizational Assessment Services and Increase the Maximum Compensation Amounts to $500,000 and $347,000, Respectively
Report
BACKGROUND
Within the last three years, the City has onboarded new executive leadership, including a new City Manager and several new Directors. As leadership evaluated City operations, service delivery expectations, and long-term organizational needs, it became increasingly important to assess whether existing departmental structures, staffing models, and functional alignments were positioned to support current priorities and future demands. Initiatives such as the creation of a new Economic Development and Sustainability Department, the continued expansion of Silicon Valley Power, and implementation of the Accela system further highlighted the need to evaluate the structure and effectiveness of City departments. Given the scope and significance of these efforts, the City required independent organizational assessment services to provide objective analysis, identify opportunities for improvement, and develop recommendations to ensure departments are structured and staffed to operate efficiently, effectively, and in alignment with the City’s evolving strategic goals. Accordingly, staff initiated a Request For Proposals (RFP) for organizational assessment services.
Following the competitive RFP process and pursuant to City Code Section 2.105.300(a) which authorizes the City Manager to execute agreements up to $250,000, the City Manager executed agreements with Raftelis Financial Consultants, Inc. (Raftelis) and Baker Tilly Advisory Group (Baker Tilly) for organizational assessments services. The agreements were executed for initial one-year terms, ending October 31, 2025 for Raftelis, and December 31, 2025 for Baker Tilly, with options to renew for up to two additional one-year terms and maximum not-exceed-compensation amounts of $250,000 each.
The services under these agreements provide organizational assessment services, including but not limited to, evaluation of staffing levels, job roles, duties, and department organizational structures. Recommendations are then developed based on findings and may include organizational best practices, supervisory-to-staffing ratios, organizational needs, workflow improvements, and optimization of organizational and staffing models for each function.
Based on the proposals submitted during the solicitation process, Baker Tilly was assigned to complete the services for Silicon Valley Power (SVP) and the Department of Public Works (DPW). Raftelis was assigned to complete the services for the Community Development Department (CDD) and Parks and Recreation Department (PRD). The scopes permit the City to request additional organizational assessments be provided for other City departments, as-needed.
DISCUSSION
Since execution of the agreements, organizational assessment services for the departments have been completed or are underway for the departments originally identified in the scope of work. As the assessments progressed, additional opportunities were identified to evaluate cross-departmental business processes, support organizational restructuring efforts, and extend services to additional departments. The following summarizes the status of each assessment and the additional services recommended to support the City’s organizational and operational objectives.
Community Development Department
The CDD organizational assessment, performed by Raftelis, provides a comprehensive evaluation of the department’s organizational culture, business processes, and management systems. At the time the assessment was initiated, the CDD Director had only recently joined the City, and Raftelis relied primarily on the division managers for input and for identifying staff to participate in interviews.
To ensure broader representation across CDD, the assessment was expanded to include interviews with up to 40 staff members and a more focused review of cross-departmental processes. The expanded scope is intended to provide a more comprehensive assessment of how internal dynamics affect performance, service delivery, and staff engagement. The additional work includes business process mapping, benchmarking, and collaborative solution development to improve the delivery of planning, permitting, and related services, with participation from departments whose processes intersect with CDD, including Public Works, Fire, Water & Sewer Utilities, and Information Technology.
The additional interviews and cross-departmental process mapping are estimated to increase CDD’s total cost by $159,834 from $88,058 for a revised total of $247,892.
Parks and Recreation Department
Raftelis has completed PRD’s organizational assessment and provided recommendations to PRD leadership. This project remained within the initial estimated budget of $76,058.
Public Works
Baker Tilly has completed DPW’s organizational assessment and provided recommendations to DPW leadership. This project remained within the initial estimated cost of $99,500.
Silicon Valley Power
The organizational assessment for SVP, performed by Baker Tilly, evaluated SVP’s organizational structure, staffing levels and workflow processes in order to position SVP to meet current and future service demands.
Through stakeholder engagement and data analysis, Baker Tilly assessed that SVP’s Business Services Division was facing several challenges affecting departmental efficiency and performance. To better align with citywide processes and improve operational efficiency, Baker Tilly recommended that the Business Services Division be reorganized under the City’s Finance Department to provide stronger structural support, clearer accountability, and improved coordination with procurement and financial planning functions. With support of the City Manager, this organizational change was implemented in August 2025, resulting in an additional cost of $24,500.
To further support operational efficiency and business continuity while SVP Business Services Division move under the Finance Department, staff recommends Baker Tilly provide additional business process mapping and documentation for procurement and financial planning functions, for an anticipated additional cost of $50,000.
In late March 2026, Baker Tilly submitted an initial draft of SVP’s full assessment. During the review of the draft, SVP proposed the creation of a new division that had not been previously evaluated as part of the original assessment. To further explore this option, staff recommends that Baker Tilly facilitate additional discussions with SVP and perform supplemental analysis to determine whether the proposed division should be incorporated into the final recommendations. This additional analysis is anticipated to cost $25,000.
In total, the additional assessments being provided to SVP are anticipated to increase SVP’s total cost by $99,500 from $123,000 for a revised total of $222,500.
Water & Sewer Utilities
Water & Sewer Utilities is now interested in receiving Raftelis’ organizational assessment services in an effort to improve organizational structure, clarify business processes, and add workflow efficiencies. The initial estimated cost for this assessment is $106,950.
Summary
The original maximum compensation amounts were established based on the estimated cost of organizational assessments for the Community Development, Parks and Recreation, Public Works, and Silicon Valley Power departments. Since execution of the agreements, the scope of services has expanded to include additional stakeholder engagement, cross-departmental business process mapping, and organizational assessment services for Water & Sewer Utilities.
To support the organizational assessment services completed, in process, and anticipated to begin, staff recommends increasing the maximum compensation amount for Raftelis by $250,000 for a revised maximum compensation amount of $500,000, and increasing the maximum compensation amount for Baker Tilly by $97,000 for a revised maximum compensation amount of $347,000. Raftelis also requested an approximate 3% increase in hourly rates as shown in the proposed Amendment No. 1.
Table 1 summarizes the original maximum compensation amounts as were specified in each Task Order. It also includes additional services utilizing contingency as needed, and details the proposed revised maximum compensation by consultant which will be documented in amended Task Orders. The contingency amounts are intended to provide flexibility to address organizational assessment needs identified through the course of the engagements. Such services may include additional stakeholder interviews, business process mapping, benchmarking, organization design support, evaluation of alternative organizational structures, and assessments for additional departments or functions, as authorized by the City.
Table 1 - Organizational Assessment Services Summary
|
Vendor/Department |
Original Maximum Compensation |
Additional Services |
Revised Maximum Compensation |
|
Raftelis |
|
|
|
|
Community Development |
$88,058 |
$74,450 |
$162,508 |
|
Parks and Recreation |
$76,058 |
$0 |
$76,058 |
|
Water and Sewer |
N/A |
$106,950 |
$106,950 |
|
Contingency |
$85,884 |
$68,600 |
$154,484 |
|
Maximum Compensation |
$250,000 |
$250,000 |
$500,000 |
|
|
|
|
|
|
Baker Tilly |
|
|
|
|
Public Works |
$99,500 |
$0 |
$99,500 |
|
SVP |
$123,000 |
$99,500 |
$222,500 |
|
Contingency |
$27,500 |
-$2,500 |
$25,000 |
|
Maximum Compensation |
$250,000 |
$97,000 |
$347,000 |
Request to Reinstate and Retroactively Exercise Option
Although each agreement provides the City with up to two additional one-year option terms, the administrative actions required to formally exercise the first option were not completed before the agreements expired, while services continued without interruption.
To accurately account for completed and ongoing work and allow for the continuation of services in support of the objectives described above, staff recommends approving the proposed amendments which reinstate the Agreements and approve the City’s retroactive exercise of the first of the two option terms for each agreement, extending the Raftelis agreement through October 31, 2026, and the Baker Tilly agreement through December 31, 2026. The City may exercise the second option term in accordance with the terms and conditions set forth in each agreement.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.
FISCAL IMPACT
Funding has been set aside in the City Manager’s Office for the organizational review assessments. The additional work outside of the initial scope of work for the assessments (process mapping and assessment of proposed new division) would be funded by each respective department and existing funds would be used to cover this cost.
COORDINATION
This report was coordinated with the City Manager’s Office, City Attorney’s Office, and Finance Department.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Approve and authorize the City Manager or designee to execute Amendment No. 1 to the agreement with Raftelis Financial Consultants to reinstate the agreement, exercise the first of two one-year options to extend the term through October 31, 2026, increase the Consultant’s standard hourly rates, and increase the maximum compensation by $250,000 for a revised maximum compensation amount of $500,000, subject to the appropriation of funds and review and approval as to form by the City Attorney;
2. Approve and authorize the City Manager or designee to execute Amendment No. 1 to the agreement with Baker Tilly Advisory Group to reinstate the agreement, exercise the first of two one-year options to extend the term through December 31, 2026, and increase the maximum compensation by $97,000 for a revised maximum compensation amount of $347,000, subject to the appropriation of funds and review and approval as to form by the City Attorney; and
3. Authorize the City Manager or designee to take any actions necessary to implement and administer the agreements, including exercising options to extend, and to negotiate and execute future amendments to (a) add or delete services associated with the services, (b) adjust rates in accordance with the rate schedule provisions, and (c) make de minimis changes, provided that the maximum compensation amounts are not exceeded and subject to the appropriation of funds and review and approval as to form by the City Attorney.
Staff
Reviewed by: Aracely Azevedo, Assistant City Manager
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Baker Tilly Agreement
2. Raftelis Agreement
3. Baker Tilly Amendment No. 1
4. Raftelis Amendment No. 1