SGS RFR Cost Response.pdf

Commonwealth of Massachusetts Vehicle Inspection and Maintenance Program

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response i April 7, 2016

TABLE OF CONTENTS

1. PROGRAM COST RESPONSE ELEMENTS [3.3.1, ATTACHMENT G] .................. 1-1

1.1 Per Inspection Fee Base Bid [3.3.1.1] ........................................................................... 1-1

1.2 VISITS and Field Investigator Costs [3.3.1.2] .............................................................. 1-3

1.3 Additional Program Costs [3.3.1.3] .............................................................................. 1-4

2. INSPECTION STATION COSTS (ATTACHMENT H) [3.3.2, ATTACHMENT H] . 2-1

2.1 Workstation Costs [3.3.2.1]........................................................................................... 2-1

2.2 Monthly Workstation Fees [3.3.2.2] ............................................................................. 2-2

2.3 Inspector Training Costs [3.3.2.3] ................................................................................. 2-3

3. BREAKDOWN OF COSTS IN THE PER INSPECTION FEE(S) AND

WORKSTATION UNIT PRICES [3.3.3, ATTACHMENT I] .............................................. 3-1

4. COSTS ASSOCIATED WITH OUTSIDE EQUIPMENT VENDORS [3.3.4] ............. 4-1

4.1 SGS Testcom Exclusive Workstation Supply and Maintenance Scenario ................... 4-1

4.2 Other Vendor Workstation Supply and Maintenance Scenario .................................... 4-1

4.3 Conclusion and Recommendation ................................................................................. 4-4

5. FINANCIAL PLAN (ATTACHMENT J) [3.3.5, ATTACHMENT J] ........................... 5-1

6. FINANCIAL QUALIFICATIONS [3.3.6] ........................................................................ 6-1

6.1 Bankruptcy Statement [3.3.6-1] .................................................................................... 6-1

6.2 Financial Capability [3.3.6-2] ....................................................................................... 6-1

6.3 Subsidiary and Affiliated Companies [3.3.6-3] ............................................................ 6-1

6.4 Subsidiary and Affiliated Companies Contract Work [3.3.6-4].................................... 6-1

6.5 Potential Conflicts [3.3.6-5] .......................................................................................... 6-1

6.6 Dunn & Bradstreet’s Comprehensive Report [3.3.6-6]................................................. 6-2

6.7 Audited Financial Statements for the Last 3 Years [3.3.6-7] ...................................... 6-18

6.7.1 SGS Financial Statements .................................................................................... 6-19

6.7.1.1 2015 Financial Statements ............................................................................... 6-19

6.7.1.2 2014 Financial Statements ............................................................................... 6-23

6.7.1.3 2013 Financial Statements ............................................................................... 6-27

6.7.2 Worldwide Environment Products, Inc. Financial Statements ............................ 6-31

6.7.2.1 2014 Financial Statements ............................................................................... 6-32

6.7.2.2 2013 Financial Statements ............................................................................... 6-37

6.7.2.3 2012 Financial Statements ............................................................................... 6-42

6.8 Corporate Tax Filings, 10K and 8K Statements and Prospectus for the Past Three Years [3.3.6-8] .................................................................................................................................. 6-46

6.8.1 2015 Tax Statement ............................................................................................. 6-47

6.8.2 2014 Tax Statement ............................................................................................. 6-49

6.8.3 2013 Tax Statement ............................................................................................. 6-51

6.8.4 2015 Bond Prospectus.......................................................................................... 6-53

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response ii April 7, 2016

This page is intentionally left blank.

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 1-1 April 7, 2016

Propietary and Confidential

1. PROGRAM COST RESPONSE ELEMENTS [3.3.1, ATTACHMENT G]

The completed RFR Attachment G is provided below and includes the following cost elements:

1.1 PER INSPECTION FEE BASE BID [3.3.1.1]

Per Inspection Fee Base Bids (RFR Section 3.3.1.1) $costs Per Inspection Fee = ———————————————————————— 4,400,000 inspections per Program Year × 5 years where: $costs = total program costs over the life of the initial 5 year Contract term

$costs shall include: costs for Workstation consumables, shipping, network management, database, inspector orientation, program communications work (except that specified in RFR Section 6.8.6; see next box), covert auditing, Workstations and auditing equipment for Agencies, field investigator tablets w/data plan, VMI (including repairer training), Motorist Assistance Centers, fee collection, and any other items that RFR Section 6 instructs Bidders to include in their costs

$costs shall NOT include: the capital cost, financing, installation or maintenance of the Workstations; specific public communications work specified in RFR Section 6.8.6, software revisions beyond 5,000 hours; Inspector training costs; VISITS application, field investigator printers/mobile printing solution, and any other items that RFR Section 6 instructs Bidders NOT to include in their costs

Base Bid Assumptions (as provided in RFR Section 3.3.1):

4,400,000 Initial Inspections per year 1,650 public stations 150 fleet stations 300 motorcycle stations

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 1-2 April 7, 2016

Propietary and Confidential

RFR

Section 3.3.1.1:

Base Bids: [Complete the Gray Boxes] NOTE to Bidders: Bidders may provide additional sheets, if necessary, to address RFR Section 3.3.1.1, item C, parts a. through d. provided that Bidders complete at least the information required for RFR Sections 3.3.1.1, items A. and B. here.

A

Base Bid for initial 4.4 million inspections per year

$costs = $32,340,000 Per Inspection Fee =

$1.47

B. Base Bid for additional inspections beyond 4.4 million per year Additional Per Inspection

Fee = $0.33

C Increase(s) to Base Bid (if any) for each additional 100 Light-Duty Inspection Stations, up to 2,200 Inspection Stations. (If no increase, please enter $0.00.)

$costs increase =

$0.00 Per Inspection Fee increase

$0.00

Additional Per Inspection

Fee increase = $0.00

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 1-3 April 7, 2016

Propietary and Confidential

1.2 VISITS AND FIELD INVESTIGATOR COSTS [3.3.1.2]

VISITS and Field Investigator Equipment Costs (RFR Section 3.3.1.2)

Bidders shall present, at a minimum, the following costs:

A. Tablet Computers for Field Investigators (as described in RFR Section 6.6.3)as:

1. Price for 50 tablets (including any batteries and/or chargers):

$75,000.00

2. Cost to replace a single tablet (including any battery and/or charger)

$1,500.00

3. Battery Replacement cost $85.00 B. Cost for Unlimited Data Plan for Tablet Computers for up to 40 Field Investigators (as described in RFR

Section 6.6.3) $1750.00 Per Month C. Mobile Printers for Field Investigators (as described in RFR Section 6.6.4) as:

1. Price for 35 printers, and $4,900.00

2. Cost to replace a single printer $140.00 D. The cost for Bidders’ proposed VISITS application (separate from the TABLETS and PRINTERS). Costs shall include initial migration of data from the existing VISITS system and any other requirements found in RFR Section 6.6. $60,000.00

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 1-4 April 7, 2016

Propietary and Confidential

1.3 ADDITIONAL PROGRAM COSTS [3.3.1.3]

Additional Program Costs – Per Hour Rates (RFR Section 3.3.1.3)

Specify the per hour rates for each contractor/subcontractor proposed.

A. For developing specific communications services (identified in RFR Section 6.8.6)on an “as needed” or contingency basis Contractor/Subcontractor(s):

SGS:

Project Manager

Business Analyst

User Interface Designer

Developer

Database Administrator

Software Architect

Security Tester

Quality Assurance

Technical Writer

Data Analyst

ASG:

Public Communications Consultant

Rate(s)

$112.93

$121.11

$118.61

$118.61

$101.60

$129.52

$77.43

$77.43

$92.90

$143.38

$125.00

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 1-5 April 7, 2016

Propietary and Confidential

B. For additional software programming after the allotted 5,000 hours have been expended (identified in RFR Section 6.3.6)

Contractor/Subcontractor(s):

SGS:

Project Manager

Business Analyst

User Interface Designer

Developer

Database Administrator

Software Architect

Security Tester

Quality Assurance

Technical Writer

Data Analyst

Rate(s)

$112.93

$121.11

$118.61

$118.61

$101.60

$129.52

$77.43

$77.43

$92.90

$143.38

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 2-1 April 7, 2016

Propietary and Confidential

2. INSPECTION STATION COSTS (ATTACHMENT H) [3.3.2, ATTACHMENT H]

The completed RFR Attachment H is provided below and includes the following cost elements.

2.1 WORKSTATION COSTS [3.3.2.1]

Workstation Costs (RFR Section 3.3.2.1)

NOTE to Bidders: Bidders may provide additional sheets or a different type of table, if necessary, to address RFR Section 3.3.2.1 requirements, provided that the Bidders’ Response includes at least the information required here. (See RFR Section 6.3) A. Workstation Costs for:

1. Light-Duty Workstation $4125.00 2.a. Heavy-Duty Workstation (with Opacity Meter) $5885.00 2.b. Heavy-Duty Workstation (without Opacity Meter) $4285.00

B. Optional Workstation Equipment Costs for:

1. Wireless OBD Scan Tool $600.00

2. Wireless OBD Scan Tool – Battery Replacement $22.00

3. Wireless Bar-Code Reader $400.00

4. Wireless Bar-Code Reader – Battery Replacement $30.00

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 2-2 April 7, 2016

Propietary and Confidential

2.2 MONTHLY WORKSTATION FEES [3.3.2.2]

Workstation Monthly Fees (RFR Section 3.3.2.2)

NOTE to Bidders: Bidders may provide additional sheets or a different type of table, if necessary, to address RFR Section 3.3.2.2 provided that the Bidder’s Response includes at least the information required here. (See RFR Section 6.3 ) A. Monthly Maintenance Fees for:

1. Light-Duty Workstation $49.00

2. Heavy-Duty Workstation $146.00

3. Wireless Equipment, by item (if any fees are proposed) $0.00

B. Installment Fee to be charged to provide a 24-month financing option to the Inspection Stations.

Light-Duty Workstation $189.06 per month Heavy-Duty Workstation (with Opacity Meter) $269.73 per month Heavy-Duty Workstation (without Opacity Meter) $196.40 per month

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 2-3 April 7, 2016

Propietary and Confidential

2.3 INSPECTOR TRAINING COSTS [3.3.2.3]

Inspector Training Costs (RFR Section 3.3.2.3)

NOTE to Bidders: Bidders may provide additional sheet s or a different type of table, if necessary, to address RFR Section 3.3.2.3 provided that the Bidder’s Response includes at least the information required here.

Bidders should also note that NO fees may be charged for Orientation Training. (See RFR Section 6.7) A. Inspector Initial Certification Training Cost for each of the following classes of Inspector:

1. Non-Commercial Inspector; $248.00

2. Commercial Inspector; $496.00

3. 7D Inspector; and $248.00

4. Motorcycle Inspector. $248.00

B. Inspector Recertification Training Cost for each of the following classes of Inspector:

1. Non-Commercial Inspector; $0.00 (no charge)

2. Commercial Inspector; $0.00 (no charge)

3. 7D Inspector; and $0.00 (no charge)

4. Motorcycle Inspector. $0.00 (no charge)

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 3-1 April 7, 2016

Propietary and Confidential

3. BREAKDOWN OF COSTS IN THE PER INSPECTION FEE(S) AND

WORKSTATION UNIT PRICES [3.3.3, ATTACHMENT I]

The completed RFR Attachment I is provided below.

Base Bid Total Contractor Cost (over initial term of contract with 4.4 million Inspection per Program Year)

$35,782,115

Total Cost Breakdown (below are the major headings; Bidders shall add further levels of sub-headings to provide additional detail)

Expenses Inspection Station Network & Workstations Capital and Financing $0 Installation (Includes work station shipping) $937,000 Maintenance

Mass Light Duty W/S $3,446,665 Mass Heavy Duty W/S - wired $17,600 Mass Heavy-Duty W/S - wireless $2,935 Mass Heavy-Duty W/S - no opacity meter $1,812,800 FSR Labor $2,209,775 FSR Vehicle $157,145

Consumables $1,872,500 Shipping $670,000

Network and Sticker Management Database and Software Hardware $260,700 Licenses $344,086 Network QA/QC $271,085 Inspection Database Development $658,177 IT Operations $2,546,095

QA/QC VID WS $370,347

JAD $37,000

Vin Power $20,000 ALARS Modernization $26,193 5000 hours (blended rate with margin) $750,285 Management, Motorcycle and Other Apps (DEV) $105,307 Management, Motorcycle and Other Apps (IT OPS) $197,970 Field Inspector Tablets with Data Plan Tablets $100,000 Data Plans $86,800 Inspector training Inspector Orientation for Startup $108,000

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 3-2 April 7, 2016

Propietary and Confidential

Update Training Curricula $122,500 Inspector licensing (new inspectors) $184,760 Online LMS $88,500 Development of CBT Training $250,000 Curricula refresh/update $110,000 28-hour Supplemental OBD Repair Training Course $475 Inspector licensing Re-certification $0 Motorist and Industry Communications Help Desk $3,519,006 Communications Materials $100,002 Auditing Covert Vehicle Auditing $542,552 Covert Video (Visual Auditing) $229,950 Vehicle Maintenance Initiative Training of Registered Repairers $79,950 Repair Shop Listing and Rating System $47,586 Motorist Assistance Centers

PMO $2,890,653

Buildings and Equipment MACs $2,012,727 Buildings and Equipment IT OPS $72,720 MAC Staff $8,046,379 Fee collection $475,890 Total Expenses without VISITS or printers or Mobile Printing Solution $35,782,115 VISITS application Software $60,000 Field Inspector Printers and/or Mobile Printing Solution $82,000 Total Expenses with VISITS or printers or Mobile Printing Solution $35,924,115

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 4-1 April 7, 2016

Propietary and Confidential

4. COSTS ASSOCIATED WITH OUTSIDE EQUIPMENT VENDORS [3.3.4]

SGS Testcom, Inc. acknowledges the Massachusetts law requiring access to the data acquisition and management network and commits to provide access and fully comply with the law.

4.1 SGS TESTCOM EXCLUSIVE WORKSTATION SUPPLY AND MAINTENANCE SCENARIO

The SGS-provided Workstation and its inspection software is a highly-integrated system working in concert with the VID. Per specifications, each element of the system is tightly integrated through the Workstation inspection software to interface with the VID and the SGS

Workstation monitoring network. This system undergoes extensive installation and acceptance testing to verify Workstation elements function effectively. This system includes testing of the interoperability of all the tools needed to conduct the inspections required for each class of

Inspection Station.

As time progresses, components comprising the Workstation system will change. This may be due to technology advancements, or the non-availability of components. Each of these component changes require changes to the inspection software that must be run through acceptance and regression testing. SGS maintains a test suite comprised of the baseline and all reconfigured components that allows for the acceptance testing of all possible Workstation system configurations.

4.2 OTHER VENDOR WORKSTATION SUPPLY AND MAINTENANCE SCENARIO

Though possible, the alternate Vendor Workstation supply and maintenance scenario would be accompanied by additional process requirements ranging from Development and QA tasks through field services. Each related process task would incur added cost or labor and thus strain financial feasibility.

Inspection Stations that procure any Workstation components outside of SGS that do not precisely match the specification driven requirements of the system may compromise the security, integrity or availability of inspection services at the Station. This is due to the closely integrated nature of our Workstation, including its embedded drivers that allow the equipment to interoperate. For security purposes, Inspection Stations are not authorized access to the

Workstation operating system, precluding the loading of driver or other application software.

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 4-2 April 7, 2016

Propietary and Confidential

Any such purchased components, including such items as printers, will not be maintained nor configured to function with the Workstation.

Any Workstation solution for the Program provisioned by an alternate supplier must also function as an integrated system.. The alternative Workstation hardware components must meet the same hardware specifications and requirements of the SGS Workstation, including the OBD interface communications rates. It must use the same highly-secured Internet connection to access the network (VID), and must work together with the SGS' inspection software requirements so as to allow control and interface with the Workstation. It must incorporate all the components necessary to provide the required functionality, including such elements as the OBD interface, barcode scanner, GPS device, cameras, monitors, printers, and optional opacity meter to perform the types of inspections required for the classes of the Inspection Stations it is designed to support.

The following will be some additional resources and tasks required to facilitate functional workstations procured from alternative Vendors

• SGS’s QA test suite would require commensurate analysis and development of test procedures for each alternate-Vendor Workstation. For workload balancing and to prevent compromise of project schedule integrity, additional Development and Quality

Analysis personnel will be required to accommodate and support alternate-Vendor

Workstations.

We foresee additional User Acceptance Test (UAT) cycles to verify alternate-Vendor

Workstations.

• As an added Direct Supplier cost, SGS would require additional floor space to accommodate footprints to support configuration and test for each alternate-Vendor

Workstation.

• As an added Direct Supplier cost, shipping a complete alternate-Vendor workstation to/from Malta, NY so SGS staff can install base image (to lock down the operating system and permit functionality only needed for inspections) and Inspection application on new workstation, test and partially certify the unit for use.

• Inspection Stations would purchase Workstation components ala carte; some from SGS and some from an alternate supplier. Mixed Workstation elements will likely cause the system to be inoperable. For workload balancing and to prevent compromise of project

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 4-3 April 7, 2016

Propietary and Confidential schedule integrity, additional Development and Quality Analysis personnel will be required to accommodate and support alternate-Vendor Workstations.

We foresee potential exposure to accelerated consumption of the allotted 5,000 software programming hours to support this approach.

• As opposed to automated software installation and subsequent software update deployments, a SGS Field Service Representative (FSR) must be present at the Inspection

Station when the alternate-Vendor Workstation is installed to apply the software and verify the camera and system installation. Due to added labor, maintenance fees would increase for alternate-Workstations.

• Inspection Stations that procure Workstation components outside of SGS that do not precisely match the specification-driven requirements of the system may compromise the security, integrity or availability of inspection services at the Station. Mixed Workstation elements will likely cause the system to be inoperable, requiring SGS Development and

Quality Analysis support.

• Alternate-Vendor Workstations supporting all classes of Inspection Stations must function as an integrated system to include all inspection tools and the SGS software necessary to integrate their results through the Workstation with the VID software and with the SGS Workstation monitoring network.

• In the sole-supplier scenario, SGS will obtain the benefit of volume purchasing discounts.

With allowance of alternative suppliers, the number of sales expected, and therefore the number of workstations to order is unknown. To avoid having considerable excess inventory and spare parts at contract end, SGS will purchase in smaller quantities which increase unit cost for all other stations. For example, equipment carts must be designed and built to Massachusetts specifications. If SGS purchases a small quantity from the alternate supplier who then has to tool up for the order, the unit cost could be as high as triple the cost versus if an order was placed for 2,000 units.

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 4-4 April 7, 2016

Propietary and Confidential

We quantify some of the additional resources and tasks required to facilitate functional workstations procured from alternative Vendors below.

Additional Element Estimated Additional Cost/Labor

Included in Inspection Fee

Direct Station Cost

Analysis and development of test procedures and verification for each alternate-Vendor Workstation configuration

120 Hrs per configuration

Floor space to accommodate footprints for each alternate- Vendor Workstation

$633/month or $106,344 over contract life

Development and Quality Analysis personnel to accommodate and support alternate-Vendor Workstations.

• 0.5 Dev PY $45/Hr

• 0.5 QA PY

$25/Hr

Ship and configure alternate-Vendor Workstation

$85-$115 per Workstation beyond base install cost

SGS FSR presence at the Inspection Station when the alternate-Vendor Workstation is installed to apply the software and verify the camera and system installation and per subsequent maintenance visit

$150-$200 per FSR visit

4.3 CONCLUSION AND RECOMMENDATION

The Agencies quality program implementation control of a single contractor is a basis for award, and is easily controlled throughout contract duration by interfacing with the Contractor

Program Manager. If alternate Workstation suppliers are allowed, support of the outside Vendors will add Program costs as SGS actively manages these Vendors to meet Workstation specifications, provide periodic software updates, and procure the resources to thoroughly test the software in the form of a comprehensive Acceptance Testing Procedure.

When all the risks and additional costs to the program are weighed we conclude that any benefit of allowing the purchase of equipment from alternate suppliers is significantly offset by these added risks and additional costs.

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 5-1 April 7, 2016

Propietary and Confidential

5. FINANCIAL PLAN (ATTACHMENT J) [3.3.5, ATTACHMENT J]

4.4 million inspection fees per year Startup Year 1 Year 2 Year 3 Year 4 Year 5 Total Revenue Per inspection fees $0 $6,468,000 $6,468,000 $6,468,000 $6,468,000 $6,468,000 $32,340,000 Monthly fees (if any) $0 $1,805,175 $1,805,175 $1,805,175 $1,805,175 $1,805,175 $9,025,875 Inspector Training fees $0 $36,952 $36,952 $36,952 $36,952 $36,952 $184,760 Total Revenue $0 $8,310,127 $8,310,127 $8,310,127 $8,310,127 $8,310,127 $41,550,635 Expenses Inspection Station Network & Workstations Capital and Financing $0 $0 $0 $0 $0 $0 $0 Installation (Includes work station shipping) $937,000 $0 $0 $0 $0 $0 $937,000 Maintenance Mass Light Duty W/S $0 $689,333 $689,333 $689,333 $689,333 $689,333 $3,446,665 Mass Heavy Duty W/S - wired $0 $3,520 $3,520 $3,520 $3,520 $3,520 $17,600 Mass Heavy-Duty W/S - wireless $0 $587 $587 $587 $587 $587 $2,935 Mass Heavy-Duty W/S - no opacity meter $0 $362,560 $362,560 $362,560 $362,560 $362,560 $1,812,800 FSR Labor $0 $411,835 $430,037 $442,746 $455,837 $469,320 $2,209,775 FSR Vehicle $0 $30,357 $30,677 $30,677 $32,717 $32,717 $157,145 Consumables $0 $374,500 $374,500 $374,500 $374,500 $374,500 $1,872,500 Shipping $0 $134,000 $134,000 $134,000 $134,000 $134,000 $670,000 Network and Sticker Management Database and Software Hardware $168,000 $9,000 $9,000 $24,900 $24,900 $24,900 $260,700 Licenses $55,436 $57,730 $57,730 $57,730 $57,730 $57,730 $344,086 Network QA/QC $50,600 $44,097 $44,097 $44,097 $44,097 $44,097 $271,085 Inspection Database Development (reduced cost due to reusable assets) $235,736 $79,569 $81,956 $84,414 $86,947 $89,555 $658,177 IT Operations (reduced cost due to reusable assets) $571,066 $384,384 $384,384 $402,087 $402,087 $402,087 $2,546,095

QA/QC VID WS $102,792 $53,511 $53,511 $53,511 $53,511 $53,511 $370,347

JAD $37,000 $0 $0 $0 $0 $0 $37,000

Vin Power $20,000 $0 $0 $0 $0 $0 $20,000 ALARS Modernization $26,193 $0 $0 $0 $0 $0 $26,193

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 5-2 April 7, 2016

Propietary and Confidential

4.4 million inspection fees per year Startup Year 1 Year 2 Year 3 Year 4 Year 5 Total 5000 hours (blended rate with margin) $0 $150,057 $150,057 $150,057 $150,057 $150,057 $750,285 Management, Motorcycle and Other Apps (DEV) $0 $19,835 $20,430 $21,043 $21,674 $22,325 $105,307 Management, Motorcycle and Other Apps (IT OPS) $0 $39,594 $39,594 $39,594 $39,594 $39,594 $197,970 Field Inspector Tablets with Data Plan Tablets $100,000 $0 $0 $0 $0 $0 $100,000 Data Plans $2800 $16,800 $16,800 $16,800 $16,800 $16,800 $86,800 Inspector training Inspector Orientation for Startup $108,000 $0 $0 $0 $0 $0 $108,000 Update Training Curricula $122,500 $0 $0 $0 $0 $0 $122,500 Inspector licensing (new inspectors) $0 $36,952 $36,952 $36,952 $36,952 $36,952 $184,760 Online LMS $51,000 $7,500 $7,500 $7,500 $7,500 $7,500 $88,500 Development of CBT Training $250,000 $0 $0 $0 $0 $0 $250,000 Curricula refresh/update $50,000 $12,000 $12,000 $12,000 $12,000 $12,000 $110,000 28-hour Supplemental OBD Repair Training Course $475 $0 $0 $0 $0 $0 $475 Inspector licensing Re-certification $0 $0 $0 $0 $0 $0 $0 Motorist and Industry Communications Help Desk $147,221 $641,906 $657,737 $674,043 $690,838 $707,261 $3,519,006 Communications Materials $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $100,002 Auditing Covert Vehicle Auditing $133,249 $77,094 $79,407 $81,789 $84,243 $86,770 $542,552 Covert Video (Visual Auditing) $0 $15,838 $15,838 $28,401 $28,401 $141,472 $229,950 Vehicle Maintenance Initiative Training of Registered Repairers $13,325 $13,325 $13,325 $13,325 $13,325 $13,325 $79,950 Repair Shop Listing and Rating System $47586 0 0 0 0 0 $47,586 Motorist Assistance Centers

PMO $571,066 $438,374 $450,807 $463,612 $476,604 $490,190 $2,890,653

Buildings and Equipment MACs $993,737 $200,926 $200,926 $200,926 $200,926 $215,286 $2,012,727 Buildings and Equipment IT OPS $16,760 $8,320 $8,320 $8,320 $8,320 $22,680 $72,720 MAC Staff $762,219 $1,456,832 $1,456,832 $1,456,832 $1,456,832 $1,456,832 $8,046,379 Fee collection $0 $95,178 $95,178 $95,178 $95,178 $95,178 $475,890

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 5-3 April 7, 2016

Propietary and Confidential

4.4 million inspection fees per year Startup Year 1 Year 2 Year 3 Year 4 Year 5 Total Total Expenses without VISITS or printers or Mobile Printing Solution $5,590,428 $5,882,181 $5,934,262 $6,027,701 $6,078,237 $6,269,306 $35,782,115 VISITS application Software $60,000 $0 $0 $0 $0 $0 $60,000 Field Inspector Printers and/or Mobile Printing Solution $82,000 $0 $0 $0 $0 $0 $82,000 Total Expenses with VISITS or printers or Mobile Printing Solution $5,732,428 $5,882,181 $5,934,262 $6,027,701 $6,078,237 $6,269,306 $35,924,115

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response April 7, 2016

This page is intentionally left blank.

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-1 April 7, 2016

6. FINANCIAL QUALIFICATIONS [3.3.6]

6.1 BANKRUPTCY STATEMENT [3.3.6-1]

Neither SGS Testcom, Inc. nor any of its parent companies has not been in bankruptcy in the last 3 calendar years and has no present intent to file for bankruptcy.

6.2 FINANCIAL CAPABILITY [3.3.6-2]

SGS Testcom has the financial capability to perform the resulting contract from this solicitation. SGS Testcom has two other significant programs that comprise about 70% of revenue over the life of the MA contract. As we have sustained success in parallel administration and support of multiple vehicle inspection programs, ranging from Prime Contractor to

Subcontracting with majority program execution responsibility, our financial capability and resources will not be adversely affected by any other held existing or potential inspection and maintenance contracts or by any other major business commitment(s) including senior liens and other financial pledges.

6.3 SUBSIDIARY AND AFFILIATED COMPANIES [3.3.6-3]

SGS Testcom, Inc. has no financial interest in any subsidiary or affiliated companies.

6.4 SUBSIDIARY AND AFFILIATED COMPANIES CONTRACT WORK [3.3.6-4]

Our parent company, SGS, headquartered in Geneva, Switzerland, will perform no work on the Contract. No subsidiary organizations will perform work on the Contract. We have engaged and affiliated with Worldwide Environmental Products, Inc. as our major subcontractor to perform equipment supply and provide inspector training.

6.5 POTENTIAL CONFLICTS [3.3.6-5]

The following are SGS Testcom’s current direct and indirect contractual obligations:

• Subcontractor for the Enhanced Motor Vehicle I/M Program, State of New Jersey, providing emissions inspection equipment and maintenance, vehicle inspection software, and Hotline support.

• Subcontractor for the Massachusetts Vehicle Check Program, providing emissions inspection equipment and maintenance, vehicle inspection software, VID support, network infrastructure support, and Hotline support.

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-2 April 7, 2016

• Prime Contractor for Next Generation Electronic Transmission (NGET) System, State of

California providing vehicle inspection software, VID support, network infrastructure support, and Hotline support.

As we have fully engaged all of the preceding obligations in parallel since 2009, inclusive of the Massachusetts Vehicle Check Program, we foresee no business activities or contractual obligations that may pose a potential conflict or otherwise affect or influence our abilities to fulfill the Contract in full accordance with the requirements of this RFR.

6.6 DUNN & BRADSTREET’S COMPREHENSIVE REPORT [3.3.6-6]

We provide Dunn & Bradstreet’s Comprehensive Report for SGS Testcom on the following pages.

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-3 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-4 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-5 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-6 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-7 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-8 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-9 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-10 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-11 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-12 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-13 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-14 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-15 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-16 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-17 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-18 April 7, 2016

6.7 AUDITED FINANCIAL STATEMENTS FOR THE LAST 3 YEARS [3.3.6-7]

Following are SGS balance sheets, income statements, and statements of cash flow for years

2015, 2014, and 2013 respectively. A statutory auditor report accompanies each year’s set of reports.

Note that the monetary unit in the SGS reports is represented as Swiss Francs (CHF). As of

March 24, 2016, the Swiss Franc to US Dollar exchange rate is 1 Swiss Franc to 1.03 US Dollar.

After the SGS financial statements, we provide the last three years of available financial statements (2014, 2013, and 2012) and associated Independent Auditor’s Reports for our major subcontractor, Worldwide Environment Products, Inc.

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-19 April 7, 2016

6.7.1 SGS Financial Statements

6.7.1.1 2015 Financial Statements

6.7.1.1.1 2015 Consolidated Balance Sheet

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-20 April 7, 2016

6.7.1.1.2 2015 Consolidated Income Statement

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-21 April 7, 2016

6.7.1.1.3 2015 Consolidated Cash Flow Statement

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-22 April 7, 2016

6.7.1.1.4 2015 Statutory Audit Report

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-23 April 7, 2016

6.7.1.2 2014 Financial Statements

6.7.1.2.1 2014 Consolidated Balance Sheet

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-24 April 7, 2016

6.7.1.2.2 2014 Consolidated Income Statement

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-25 April 7, 2016

6.7.1.2.3 2014 Consolidated Cash Flow Statement

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-26 April 7, 2016

6.7.1.2.4 2014 Statutory Audit Report

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-27 April 7, 2016

6.7.1.3 2013 Financial Statements

6.7.1.3.1 2013 Consolidated Balance Sheet

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-28 April 7, 2016

6.7.1.3.2 2013 Consolidated Income Statement

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-29 April 7, 2016

6.7.1.3.3 2013 Consolidated Cash Flow Statement

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-30 April 7, 2016

6.7.1.3.4 2013 Statutory Audit Report

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-31 April 7, 2016

Proprietary and Confidential

6.7.2 Worldwide Environment Products, Inc. Financial Statements On the following pages, we provide the last three years of available financial statements (2014, 2013, and 2012) for our major subcontractor, Worldwide Environment Products, Inc.

On behalf of Worldwide Environment Products, Inc. we respectfully request their financial statements be redacted from all public information requests for this response.

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-32 April 7, 2016

Proprietary and Confidential

6.7.2.1 2014 Financial Statements

6.7.2.1.1 2014 Consolidated Balance Sheet

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-33 April 7, 2016

Proprietary and Confidential

6.7.2.1.2 2014 Consolidated Income Statement

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-34 April 7, 2016

6.7.2.1.3 2014 Consolidated Cash Flow Statement

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-35 April 7, 2016

6.7.2.1.4 2014 Independent Auditor’s Report

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-36 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-37 April 7, 2016

Proprietary and Confidential

6.7.2.2 2013 Financial Statements

6.7.2.2.1 2013 Consolidated Balance Sheet

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-38 April 7, 2016

6.7.2.2.2 2013 Consolidated Income Statement

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-39 April 7, 2016

6.7.2.2.3 2013 Consolidated Cash Flow Statement

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-40 April 7, 2016

6.7.2.2.4 2013 Independent Auditor’s Report

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-41 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-42 April 7, 2016

Proprietary and Confidential

6.7.2.3 2012 Financial Statements

6.7.2.3.1 2012 Consolidated Balance Sheet

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-43 April 7, 2016

6.7.2.3.2 2012 Consolidated Income Statement

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-44 April 7, 2016

6.7.2.3.3 2012 Consolidated Cash Flow Statement

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-45 April 7, 2016

6.7.2.3.4 2012 Independent Auditor’s Report

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-46 April 7, 2016

6.8 CORPORATE TAX FILINGS, 10K AND 8K STATEMENTS AND PROSPECTUS FOR THE PAST

THREE YEARS [3.3.6-8]

SGS Testcom, Inc., the entity bidding this RFR, is not a publicly traded company, Our parent company, SGS, is publicly traded on the Swiss Exchange. As corporate policy disallows public release of actual tax returns, we provide 2015, 2014, and 2013 tax statements gleaned from the respective annual reports, followed by SGS’s 2015 Bond Prospectus.

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-47 April 7, 2016

6.8.1 2015 Tax Statement

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-48 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-49 April 7, 2016

6.8.2 2014 Tax Statement

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-50 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-51 April 7, 2016

6.8.3 2013 Tax Statement

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-52 April 7, 2016

Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Cost Response 6-53 April 7, 2016

6.8.4 2015 Bond Prospectus