A04_STATEMENT_OF_WORK.pdf

STATEMENT OF WORK

U.S. DEPARTMENT OF THE INTERIOR, BUREAU OF INDIAN AFFAIRS

WESTERN REGIONAL OFFICE – REAL ESTATE SERVICES

BUSINESS LEASE FORENSIC ACCOUNTING/AUDIT CONSULTING SERVICES

Part I

A. Background/Objective.

The United States Department of the Interior, Bureau of Indian Affairs (BIA), as authorized under 25 C.F.R. §162.027 and 162.464, may investigate compliance with the lease.

Furthermore, Article 6.B.1.D. of the lease, as amended, allows for, “any authorized representative of the United States, or any qualified accounting agent or agents appointed by Lessor, shall have access to, and the right to examine and audit, any or all pertinent books, documents, papers and records, including state and federal income and sales tax returns, of the Lessee, Lessee’s Subleases relating to this lease, during the normal business hours of any working day. Lessee shall insert in all Subleases a similar provision pertaining to this right of access, examination and audit and shall, upon reasonable notice, make available to said representative, agent or agents all books and records of Lessee’s

Sublessees to which Lessee has the right of access and which may be requested as necessary for completion of a special audit.”

The objective of the BIA is to make sure the lessee meets the rental and other payment requirements as specified in the lease. As provided for in a Second Amendment to the

Lease, Article 6.B.1.D, Rental and other Payments – Accounting and Audits, “… that in any event, not later than 120 days after the end of each Lease Year, submit to the lessor and the Secretary a statement of Gross Rental Income. The statement shall be certified by an authorized officer of the Lessee and be reviewed by a Certified Public Accountant

(CPA) under Generally Acceptable Accounting Principles (GAAP), licensed in the State of Arizona.”

The BIA is questioning the sufficiency of the amount of percentage rent as none has been paid until receiving notice of the statement of Gross Rental Income for calendar year 2022 on Monday, January 16, 2023, in which percentage rent was determined. The lease was entered into on Tuesday, July 13, 2004 and beginning in lease year 2010 and thereafter through the 25th year of the initial term of the lease, percentage rent is 13% of the Gross

Rental Income of the prior calendar year. Statements of Gross Rental Income have not been consistently reported and it wasn’t until 2023, nearly 19 years after the lease began, that percentage rent had been calculated and reported by the Lessee. The January 16, 2023 letter reported calendar year 2022 gross revenues, however it did not indicate where the rental income was derived from (lessee, sublessees, respective affiliates) nor was it evident that it was reviewed by a CPA in the State of Arizona. Therefore, the BIA wants an audit of the

Lessee’s records, books, accounts, tax returns, and other data for the past six (6) years. The accounting must include both the Gross Rental Income of Lessee, Sublessees, or their respective Affiliates as specified in the Second Amendment and Settlement Agreement, approved on Thursday, May 15, 2008.

Furthermore, under Article 12 B, the lessee is to maintain a rental bond at all times during the lease and is thought to currently be in default for not having a Rental Bond on file with the Secretary. Under Article 13, Sublease, Assignment, Transfer, the Lessee is to submit revised rent schedules on an annual basis to the Lessor and Secretary. As part of the services, we are seeking documentation of any rental bonds and the rent schedules as they have not been provided to the Secretary.

We are also looking for documentation providing evidence of Public Liability Insurance, as required under Article 19, to the Lessor and the Secretary. Likewise, certificates of insurance for Fire and Damage Insurance, as required under Article 20, to the Lessor and

Secretary.

B. Scope

Overall purpose is to provide a comprehensive report on findings of the audit. The contractor shall work closely with the Western Regional Deputy Realty Officer and Pima

Agency Realty staff to conduct one (1) forensic audit. The contractor needs to be familiar with Business Leasing rental terms and provisions including increases in base rent, additional percentage rent calculations, and gross rental receipts.

The contractor must have experience working on commercial/business lease auditing practices. The contractor must be available to travel to the business lease located near 32nd

Street and Pecos on the Gila River Indian Reservation. Travel will be included in the contractor’s firm fixed price and will not be reimbursed separately.

The contractor shall conduct a forensic audit that includes the following performance tasks:

- Examine, document, and/or solicit records regarding a forensic audit for the past six

(6) years in connection with the Pecos Road & 32nd Street RV & Boat Storage, L.L.C.

Lease No. B-GR-243. Pertinent documentation includes but is not limited to the following:

o Rent schedules/rent rates o Sublease agreements o U-Haul dealership agreements o Rental agreements o Copies of state and federal income taxes and accompanying tax schedules o Use or transaction privilege tax returns o Any other substantiating tax documents

- Accessing U-Haul and RV Storage websites to obtain various financial information or another documentation.

- Employ methodologies and procedures commonly used during a forensic audit engagement to search for misuse or misappropriation of assets and cash.

- Determine the potential Gross Rental Income by the number of storage types and various sizes, identified as being available for rent such as:

o Mini Storage spaces o RV Storage & Boat Storage o Contractor Storage/Parking o General Contractor Storage/Parking and any other types of storage

- Lessee reported that there are 1,265 total storage spaces and the park is typically at 99% occupancy. Confirm that the total number of spaces that are being reported as available for rent reconciles with the actual number of spaces.

- Forensic audit must include a review of any other income derived from the leased premises including the following:

o Dump station o Propane o RV Wash o U-Haul Rentals o Air o Any other non-reported income

- If audit findings indicate the Gross Rental Income would generate percentage rent, then perform a calculation of the amount past due within the past six (6) year time frame.

Apply delinquency rate of 12% as specified in Article 6(F), if determined any rents or charges were not paid timely.

- Prepare audit report with all findings and recommendations.

C. Applicable Documents

Contractor will be provided with a copy of Lease No. B-GR-243, the First and Second

Lease Amendments, and the copies of Gross Rental Income documents that the BIA is in receipt of.

Part II

A. Technical Requirements

Contractor must hold a valid, active CPA license within the State of Arizona. Contractor must be knowledgeable about business leasing rental provisions including evaluating if the reported Gross Rental Income is sufficient for the past six (6) years. Vendor will provide two recent projects in similar scope and complexity to this requirement (include contract number, dollar amount, point of contact name, email, phone number within last three years).

Vendor will break down pricing for each task:

Task 1: 1-2 years

Task 2: 3-4 years

Task 3: 5-6 years

B. Deliverables

Hold a pre-work meeting with Contracting Officer’s Representative (COR) or Point of

Contact (POC) (contractor to initiate) – held to clarify any issues pertaining to the

Statement of Work, Scope, reporting requirements, and other concerns specific to the assignment. Deliver by having pre-work meeting within 3 days after the contract is awarded.

Coordinate with POC the physical site inspection date to allow reasonable notice to the lessee so that they will make available all books and records, and to physically count and review the storage types.

For any questions concerning the work assignment, work with COR/POC designated to resolve any issues. Deliverable is at any time throughout the contract performance period.

Communicate audit findings as specified in the Scope in writing for the past six (6) years.

Provide copies of all documentation obtained or report if none were found. Deliver final audit report within 45 days from contract start date.

Part III

A. Security

Terms and conditions of the IDIQ requirement on a minimum background check needed, contractor must work with POC/COR and/or possible tribal POC before performing physical inspections of the property.

B. Place of Performance

Gila River Indian Reservation. 32nd Street and Pecos.

C. Period of Performance

45 days

D. Special Considerations.

Undetermined at this time.

E. Contract Type

Open sourced, non-proprietary.

F. Travel

Any travel cost shall be included in the amount.

Part IV

A. Acceptance

Acceptance of all work performed, reports, and other deliverables will be by the COR or

Contracting Officer (CO).

Format: Work product shall be submitted in hard copy and by electronic PDF format.

Electronic submissions shall be in format compatible with a Microsoft Windows platform, in Microsoft Office format. All text and diagrammatic files shall be editable by the

Government.

Timeliness: Contractor performance shall be considered timely when all deliverables are accepted on or before the due date specified in this Statement of Work or submitted in accordance with an alternative schedule approved by the COR and CO. The Government reserves the right to make equitable adjustments for late and/or unacceptable deliverables.

B. Disclosure of Information

The Government owns all data, rights, and deliverables in the performance of this contract.

Information made available to the vendor by the Government for the performance or administration of this effort shall be used only for those purposes and shall not be used in any other way without the written agreement of the CO.

The contractor agrees to assume responsibility for protecting the confidentiality of

Government records, which are not public information. Each contractor or employee of the contractor to whom information may be made available or disclosed shall be notified in writing by the contractor that such information may be disclosed only for a purpose and to the extent authorized herein.

Limited Use of Data:

Performance of this effort may require the contractor to access and use data and information proprietary to a Government Agency or Government Contractor, which is of such a nature that its dissemination or use, other than in performance of this effort, would be adverse to the interests of the Government and/or others.

Contractor and/or contractor personnel shall not divulge, or release data or information developed or obtained in performance of this effort, until made public by the Government, except to authorize Government personnel or upon written approval of the CO. The contractor shall not use, disclose, or reproduce proprietary data that bears a restrictive legend, other than as required in the performance of this effort. Nothing herein shall preclude the use of any data independently acquired by the contractor without such limitations or prohibit an agreement at no cost to the

Government between the contractor and the data owner, which provides for greater rights to the contractor.

C. Contractor Personnel

The contractor shall have at least two (2) years’ of audit experience and be responsible for managing and overseeing the activities of all contractor personnel, as well as subcontractor efforts used in performance of this requirement. The contractor’s management responsibilities shall include all activities necessary to ensure the accomplishment of timely and effective support, performed in accordance with the requirements contained in the Statement of Work.