The Palo Alto Council Appointed Officer Committee voted on Dec. 10 to exercise the two-year extension option in the city's internal audit services contract with Baker Tilly, a contract the staff said currently runs through June 20, 2026.

Assistant City Manager Kylie Nose told the committee staff did not believe there was a need to renegotiate the contract and summarized prior council direction to negotiate an extension. She explained that the auditor's work functions similarly to a budget cycle and that it "really it's almost an 18 month process" to complete a risk assessment, develop an annual work plan and execute the audits, arguing that a two-year contractual option better aligns with that cadence.

Council members said a multi-year option can lock in rates and avoid year-to-year renegotiation; one member raised negotiation and termination concerns. City Auditor Kate Murdoch located section 19 of the contract and read the termination language aloud: "the city may suspend the performance of the services in whole or in part to terminate this agreement whether without cause by giving 10 days prior written notice thereof to the consultant." That confirmation helped resolve concerns about retaining an escape clause.

A motion to exercise the two-year extension option was made, seconded and approved unanimously on a roll-call vote: Council member Burt, Chair Stone and Council member Vinkar voted yes. The committee's action directs staff to exercise the extension option; staff will confirm the contract language and termination clause and proceed with the extension steps required by the contract.

Key details: the contract's current expiration date is June 20, 2026; staff said the contract permits extending up to two years or renegotiating terms if the committee prefers; the termination clause cited in section 19 references a 10-day prior written notice.