Report 2018-108 Recommendation 8 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 #8 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, hold contract managers accountable for performing the duties that the Authority's policies assign to them. Specifically, CMSU and, to the extent necessary, contract managers' supervisors should require and review evidence from contract managers demonstrating their approval of deliverables, detection and resolution of contractor performance issues, and assessment of contract amendments for merit. The Authority should not accept observations and reports from its contractors or the RDP consultants in place of this evidence.

6-Month Agency Response

The CAB has conducted and completed assessments for all 195 current active contracts. CAB assessors evaluated documentary evidence for compliance with Contract Management Procedure requirements. All non-compliance issues were reported, tracked and resolved. CAB will continue to assess active contracts to ensure contract managers are following the policies and procedures established by the Authority.

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

The Authority provided records indicating that staff and RDP consultants completed assessments of 63 contract managers and the contracts assigned to them. Upon our request, the Authority provided examples of its assessment documents; these assessments indicate that reviewers determined whether contract managers were maintaining certain, but not all, documentation that Authority policies require--such as invoice logs--and issued non-compliance findings when they were not. We also reviewed documentation indicating that the Authority made contract managers' supervisors aware of instances of noncompliance. The Authority informed us that it will begin following up on the results of the initial assessments in Fall 2019, and that this second phase will seek to ensure that contract managers are filing all required documentation and following all required Authority contract management processes when developing and using that documentation. Going forward, the Authority should not only conduct this scheduled follow-up review but continue to assess contract manager performance on a regular basis as part of holding them accountable for their responsibilities.

60-Day Agency Response

As of December 31, 2018, the CMSU has completed 23 assessments of contract managers' performance and the remainder are scheduled. These assessments are following a formal process requiring and reviewing evidence from contract managers demonstrating their approval of deliverables, detection and resolution of contractor performance issues, and assessment of contract amendments. Once an assessment is issued, it will be tracked to closure/resolution to verify the implementation of any required corrective action. Corrective actions will be tracked by the Quality team and reported to executive management.

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

This recommendation pertains to the ongoing evaluation of contract managers' compliance with Authority policies and procedures. The Authority provided a draft document summarizing the process by which ongoing evaluations will take place. The document states that a compliance assessment schedule will be developed and will include assessments of each contract and each contract manager within the assessment period, which it indicates is at least once every calendar year. Although the Authority indicates it has completed 23 assessments, it has not provided documentation of those assessments. As part of our assessing this recommendation's implementation, we will review the schedule, assessment tools used, as well as the results of actual assessments. In doing so, we will look for involvement on the part of contract managers' supervisors, such as reviewing evidence from contract managers demonstrating their approval of deliverables, detection and resolution of contractor performance issues, and assessment of contract amendments for merit.

All Recommendations in 2018-108

Agency responses received are posted verbatim.