Contracts Administration Management Action Plan Status June 20, 2013

Background • In January 2012, the Board authorized an on-call management and consulting services contract with SC&H for the following services: – Assessment of internal controls – Financial planning and analysis – Business management practice documentation – Evaluation of document management needs – Other financial and business management reviews • At NCTD’s request, SC&H performed an analysis of the contracts administration function at NCTD. • SC&H documented 19 findings and provided recommendations for improvement through proposed management action. – NCTD was already advancing some of the improvements – Areas of risk have been stabilized to mitigate risk 2

Management Action Plan – Major Remaining Activities • 11 of the 19 recommended improvements are complete. • Remaining Activities: – Ongoing Staff Development and Training – Enhancement of Procurement and Contracts Administration Manual by December 2013 – Implementation of Document Management System by December 2013 – Implementation of JDE Report Writer by December 2013 – Implementation JDE Time and Attendance System by December 2013

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Management Action Plan Status 1. Contract compliance monitoring – Observation: NCTD lacks communication regarding monitoring of contracts for compliance. – Recommendation: Establish procedures that address monitoring contract compliance. – Management Action: • Comprehensive Compliance & Oversight Program Plan has been implemented for all service operations contracts • Project Management Office has been established & a Project Management Handbook (January 2013) has been developed – Remaining Management Action(s): • None 4

Management Action Plan Status 2. Regulatory compliance – Observation: Regulatory compliance is not centrally monitored. – Recommendations: Establish procedures. For labor costs, reconcile certified payrolls to daily reports. – Management Action: • Hired General Counsel, Compliance Officer, and Civil Rights Officer • Established centralized compliance program in Office of General Counsel • Established Comprehensive Compliance & Oversight Program – Remaining Management Action(s): • None 5

Management Action Plan Status 3. Evaluation panel member selection – Observation: NCTD lacks guidelines regarding panels. – Recommendation: Devise and implement guidelines. – Management Action: • Procedure for panel selection and scoring has been developed • Guidance is being provided by General Counsel – Remaining Management Action(s): • Training of staff

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Management Action Plan Status 4. Evaluation panel scoring – Observation: Evaluation score sheets are inconsistently completed and lack supporting information to justify the selection of the vendor. Also, there is no clear guidance for procurements under $100,000. – Recommendation: Contracts and Procurement Department should reject incomplete evaluations. Additionally, escalation procedures should be added for panel issues and scoring criteria should add a fifth rating. Finally, revise PM handbook to require PM’s to evaluate and rank selection criteria to include in the solicitation documents. – Management Action: • Updated Procedure for panel selection and scoring • Guidance is being provided by General Counsel • Project Management Handbook has been developed 7

Management Action Plan Status 4. Evaluation panel scoring – Remaining Management Action(s): • Training of staff

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Management Action Plan Status 5. JD Edwards (JDE) – Observation: System is inefficient, labor intensive, and not user friendly. – Recommendation: Work with IT to improve system efficiencies related to notifications and report generation. – Management Clarification: • JDE does provide work breakdown schedules • JDE does provide budget to actual spending – Management Action: • NCTD executed a contract with New Horizons Computer Training that supports the provision of training to improve proficiency with JDE 9

Management Action Plan Status 5. JD Edwards (JDE) – Remaining Management Action(s): • JDE Time and Attendance module has been procured and will be operational by December 2013 • Report Writer for JD Edwards is pending Board action in July 2013. This system will allow the development of custom reports thereby improving efficiency. Estimated date to fully implement Report Writer is December 2013.

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Management Action Plan Status 6. Business case justification – Observation: Requirements regarding submission of justification need improvement. – Recommendation: Management should implement clearly defined guidance and develop a form that indicates the required information and approvals necessary for a justification. – Management Action: • Updated business justification process to provide clear guidance – Remaining Management Action(s): • Training of staff

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Management Action Plan Status 7. Task order/purchase order review – Observation: Lack of controls to prevent duplicate tasks or purchase orders. – Recommendation: Procurement and Contracts Administration Manager should confer with steering committee to ensure no duplication. – Management Action: • Monthly Procurement Review Committee has been established oversight of procurement • Capital Projects Steering Committee has been implemented • Sole Source Procurement Review Committee has been established to review requests for sole source procurement – Remaining Management Action(s): • None

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Management Action Plan Status 8. Memorandum of understanding (MOU) – Observation: District does not actively monitor MOUs for compliance or potential duplication. – Recommendation: Contracts and Procurement Department should assign staff to monitor active MOUs. District should enforce policies. – Management Action: • Updated MOU process has been completed • All MOUs must be approved by General Counsel • Management Analysts have been added to support monitoring of MOUs – Remaining Management Action(s): • Training of staff • Assignment of specific staff to MOUs 13

Management Action Plan Status 9. Avoidance of competitive procurement – Observation: Sole source procurements are overused without justification. – Recommendation: Management should institute greater oversight of sole source procurements and utilize steering committee to evaluate justifications. – Management Clarification: • On-call contracts are competitively procured and rates are established as part of the final contract

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Management Action Plan Status 9. Avoidance of competitive procurement – Management Action: • In September 2012, Executive Director restated FTA guidance and District’s position on competitive and sole source procurements. • Sole Source Procurement Review Committee has been established. • Updated Sole Source Procurement Request process and form – Remaining Management Action(s): • None

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Management Action Plan Status 10. Invoice review process – Observation: Manual process is inefficient and prone to errors. – Recommendation: Management and IT should automate process. – Management Action: • Assessed automated invoice review process systems. – Remaining Management Actions: • Board action is scheduled for June 20, 2013 to support the procurement of Document Management System with functionality to automate invoice review process. System will be in place by December 2013. • Procedure will be finalized by August 2013 that addresses responsibilities related to invoice review process. 16

Management Action Plan Status 11. Project Manager Guidance – Observation: Project managers do not have accurate guidance for procurement process. – Recommendation: Management should update Project Management Handbook and institute project management training within three months of hire and annual refresher training. – Management Action: • Project Manager Handbook has been developed. – Remaining Action(s): • Training of staff

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Management Action Plan Status 12. Quality assurance – Observation: NCTD does not conduct quality assurance (QA) reviews prior to sending solicitations and contracts to vendors. – Recommendation: Management should implement a formalized QA review process. – Management Action: • General Counsel is reviewing and approving all solicitations and contracts prior to sending to vendors for proposal or execution. – Remaining Management Action(s): • General Counsel will develop updated procurement and contract templates by December 2013.

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Management Action Plan Status 13. Supporting documentation – Observation: Inaccurate or incomplete documentation accompanies requisitions. – Recommendation: Use checklists to enhance the work flow, and add staffing ensuring all required documentation is submitted. – Management Action: • Checklist has been updated. • Three Management Analyst positions were added and one additional will be added in FY 14 with the responsibility of ensuring that requisitions are submitted consistent with checklist requirements. – Remaining Management Action(s): • None 19

Management Action Plan Status 14. Collaboration – Observation: Inadequate collaboration occurs between Contracts and Procurement Department staff and stakeholders. – Recommendation: Management should institute kick-off meeting with all stakeholders, including Contracts and Procurement staff. – Management Action: • Monthly Procurement Review Committee meetings have been implemented. • Project Management Handbook has been developed – Remaining Management Action(s): • None 20

Management Action Plan Status 15. PM/CA roles and responsibilities – Observation: Roles and responsibilities of project managers (PMs) and contract administrators (CAs) are unclear. – Recommendation: District policies and procedures should contain roles and responsibilities of PMs and CAs. – Management Action: • On-going guidance is being provided by Chief Financial Officer and General Counsel – Remaining Management Action(s): • Updated procedure will be developed and incorporated into Procurements and Contracts Administration Manual which will clarify roles and responsibilities. This procedure will be included in the Procurement and Contracts Administration Manual by December 2013. 21

Management Action Plan Status 16. Contracts and Procurement resources – Observation: The Contracts and Procurement Department has inadequate resources to maintain the current workload. – Recommendation: Management should add a data entry position to allow Contracts and Procurement Department time for more technical matters. – Management Action: • Three new Management Analyst positions have been assigned responsibilities to ease workload of Procurements and Contracts Administration Department. – Remaining Management Action(s): • None 22

Management Action Plan Status 17. Contracts and procurement staff inconsistencies – Observation: Contract administrators and buyer perform respective duties inconsistently. – Recommendation: Management should remediate inconsistencies. – Management Action: • Ongoing guidance is being provided by Chief Financial Officer and General Counsel to reduce inconsistencies. – Remaining Management Action(s): • Updated Procurements and Contracts Administration Manual will be completed by December 2013. • Training of staff to ensure consistency by providing more detailed guidance and standardized forms. 23

Management Action Plan Status 18. Policies and procedures – Observation: Current Procurement Manual is out of date. – Recommendation: Management should update Procurement Manual to include all Contracts Administrator duties. – Management Action: • Manual was updated and subsequently reviewed by FTA as part of its Triennial Review. The manual is compliant with FTA requirements. • General Counsel is providing guidance, reviewing and approving all procurement activity. – Remaining Management Action(s): • Non-FTA related enhancements are being made to Procurement and Contracts Administration Manual. This work will be complete by December 2013. 24

Management Action Plan Status 19. Manual paperwork and document storage – Observation: Staff demonstrate an over-reliance on processing manual paperwork. NCTD lacks central storage space for Contracts and Procurements documents. – Recommendation: Management should automate process and institute formal methodology for storing all critical documents. – Management Action: • Draft Document Management Policy has been developed – Remaining Management Action(s): • Recruitment of Document Control Coordinator underway • Document Management System is scheduled for board action on June 20, 2013. System will be fully operational by December 2013. 25

Questions

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