Report 2018-108 Recommendation 6 Responses

Report 2018-108: California High‑Speed Rail Authority: Its Flawed Decision Making and Poor Contract Management Have Contributed to Billions in Cost Overruns and Delays in the System's Construction (Release Date: November 2018)

Recommendation #6 To: High-Speed Rail Authority, California

To improve its contract management, increase accountability, and justify the significant amount it pays for contracted services, the Authority should, by May 2019, prioritize contract management efforts and reduce the frequency with which contract management responsibilities shift among Authority staff by establishing a formal process for hiring and assigning full-time, experienced contract managers. These contract managers should have duty statements reflecting their contract oversight responsibilities, and they should report to supervisors who understand those responsibilities and have extensive knowledge about the contracts' deliverables. In addition, those supervisors' duty statements should clearly lay out their responsibility for addressing any contract manager noncompliance with the Authority's contract management policies and procedures, whether reported by CMSU or identified by another means.

6-Month Agency Response

The Authority has updated and finalized the Human Resources Hiring manual to include language regarding hiring contract managers. A process was developed that requires the Authority to justify the reason for contract management responsibilities to shift among Authority staff. In addition, the organization chart has been updated to denote positions that are contract managers. Duty statements for both contract managers and their supervisors have been approved and finalized. Contract manager training specifically for supervisors was created and contract manager supervisors have been trained.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

We reviewed materials the Authority provided to support its implementation of this recommendation, and confirmed the revisions to its hiring manual and the existence of contract management training for supervisors. We also reviewed a selection of duty statements for contract managers and their supervisors and confirmed that, in contrast to what we found during our audit, those duty statements include clear statements about contract management and supervisory responsibilities. The Authority provided evidence that it has assigned full-time contract managers to the largest and highest risk types of contracts we reviewed during our audit, and has indicated to us that it will continue to assess the need to assign additional full-time contracts managers as it enters into new contracts or amends existing contracts.

60-Day Agency Response

The Authority has drafted a formal process for hiring and assigning full-time experienced contract managers to reduce the frequency with which contract management responsibilities shift among Authority staff. This formal process emphasizes contract management experience/skills as well as desirable contract manager qualifications. The draft contract manager hiring process is circulating for comment and finalization.

All new advertised positions that require contract management specific skills are specified within the duty statement. The Human Resources Office will review all job advertisements to assure compliance with the formal process. Furthermore, the Authority will denote contract management positions on the organization chart. The updated organization chart is being circulated for comment and finalization.

All existing duty statements have been reviewed and modified to reflect contract management/oversight responsibilities for all contract managers and their supervisors. Contract manager supervisors' duty statements address their responsibility to hold their contract management staff accountable for compliance with the Authority's contract management policies and procedures. Revised duty statements are being circulated for comment and finalization.

Contract manager supervisors will attend contract management training to ensure that the contract managers they supervise are adhering to the Authority's policies and procedures. The Authority will create a separate contract management training specifically for supervisors by January 2019.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Authority provided draft documentation related to the required duties and qualifications of contract managers, as well as formal processes for transferring responsibility for contracts among contract managers. It also provided draft training materials for staff that supervise contract managers. To fully implement this recommendation, the Authority must finalize its hiring process, assign contract managers official positions on its organizational chart, adjust reporting relationships as needed, and provide and document relevant training for supervisors.

All Recommendations in 2018-108

Agency responses received are posted verbatim.