Sound Transit steps can be taken to achieve greater consistency. However ... Utilize...

October18,2013

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MossAdamsLLP

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SoundTransit

Post‐AwardGoodsandServicesContractManagement

PerformanceAuditFinalReport

Sound Transit Post-Award Goods and Services Contract Management Performance Audit | i

TABLE OF CONTENTS

I. EXECUTIVE SUMMARY 1A. BACKGROUND 1

B. SCOPE AND METHODOLOGY 1

C. SUMMARY OF FINDINGS AND RECOMMENDATIONS 1

II. BACKGROUND, SCOPE, & METHODOLOGY 4A. BACKGROUND 4

B. SCOPE 5

C. METHODOLOGY 7

D. STATEMENT ON COMPLIANCE WITH GAGAS 8

III. FINDINGS AND RECOMMENDATIONS 9A. PRIMARY FINDING 9

B. SUBORDINATE FINDINGS 10

IV. ACTION PLAN 28

V. MANAGEMENT RESPONSE 31

Sound Transit Post-Award Goods and Services Contract Management Performance Audit | 1

I. EXECUTIVE SUMMARY

A. BACKGROUND

Sound Transit elected to conduct a performance audit of post‐award goods and services contractmanagement as part of continuous improvement initiatives that include revising Agency policies,developingnewproceduresforday‐to‐dayoperations,andimplementingsystemupgradesforaccountspayableautomation.SoundTransitreliesheavilyongoodsandservicesprovidedbyprivateentitiesandother governments. There were 581 active goods and services contracts at the time this audit wasconducted,withatotalcommitment,orbudgetedvalue,of$326million.

B. SCOPE AND METHODOLOGY

The purpose of this objective analysis of post‐award goods and services contract management is toassist management and those charged with governance and oversight to improve operations andperformance,facilitatedecisionmaking,andcontributetopublicaccountability.Themajorobjectivesofthe audit are to 1) evaluate Sound Transit’s post‐award goods and services contract managementpractices, and 2) provide recommendations for potential contract management improvementopportunities,withafocusonAgencybusinesspracticesthatenhanceefficiencyandeffectiveness.

Forthepurposesofthisaudit,thefollowingdefinitionofcontractmanagementisutilized:Post‐contractaward, contract management is 1) the administration of contracts made with vendors and 2) themanagementofassociatedprojects,asdetailedbelow:

1. Contractadministration:Thepost‐awardadministrationofcontractstoensurecompliancewiththetermsofthecontractbyboththecontractorandthegovernmentalentity.Specificcontractadministrationdutiesvarybetweencontracts,detailedfurtherinSectionII.

2. Projectmanagement: The post‐award management of the schedule, budget, and quality of aproject.Projectmanagersperformvendormanagement,performanceassessment, andqualityassurancetasks,detailedfurtherinSectionII.

The audit methodology consisted of four phases, including 1) project initiation and ongoingmanagement,2)fact‐finding,3)analysis,and4)reporting.Thefact‐findingphaseincludedinterviewsofmore than 40 Sound Transit personnel, review of relevant Agency documentation, research of bestpracticesinpost‐awardcontractmanagement,studyofthecontractmanagementstructureandpoliciesofpeertransitagencies,andanalysisofasampleofactivegoodsandservicescontracts.

C. SUMMARY OF FINDINGS AND RECOMMENDATIONS

Through the performance audit process, the audit team gained broad and deep exposure to Agencymanagement and staffwith roles and responsibilities associatedwith post‐award goods and servicescontractmanagement. It is evident that SoundTransit’s personnel are dedicated to achievingAgencygoalsandobjectivesandcommittedtogoodstewardshipofpublicfunding.


Many elements of post‐award contract management appear to align with best practices, includingdispute resolution, contract termination, and the payment process. In addition, within operatingdepartmentstherewerebestpracticesidentified.Forexample,theFacilitiesDivisionmeetsbimonthlywith its assigned contract specialists to review all open contracts for budget and schedule issues. Inaddition, the recent addition of a Business Manager to oversee the contracts process within IT hasimprovedconsistencyanddocumentation.

Findingsandrecommendationsaresummarizedbelow.Theyaddressthepotentialforgreaterefficiencyand effectiveness in the post‐award goods and services contractmanagement process, structure, andpractices. The primary finding is goods and services contractmanagement is inconsistent across theAgency. There are a number of factors (subordinate findings) that contribute to the primary finding.Variousstepscanbetakentoachievegreaterconsistency.However,somekeypolicyandorganizationaldecisionsshouldbemadebeforeallof therecommendationscanbe implemented.Assuch, theactionplaninSectionIVofthisreportpresentsrecommendationsinthreephases:

1. Zero to six months, when organizational structure, workforce, and resource allocation arestudiedindetail,andchangesnotdependentontheselectedorganizationalstructurearebegun;

2. Sixtotwelvemonths,whenchangesdependentontheorganizationalstructurearebegun;and,3. Twelvemonthsandup,whenresourcesareaddedifneeded.

PrimaryFinding

GoodsandservicescontractmanagementpracticesareinconsistentacrossSoundTransit.

PrimaryRecommendation

Minimizeriskbymaximizingconsistencyacrossgoodsandservicescontractmanagementpractices.

SubordinateFindingsandRecommendations

Decentralization

Finding Responsibilityforadministrationofgoodsandservicescontractsisbroadlydispersed,involvingprojectmanagerswithinmultipleoperatingdepartmentsordivisions.

Recommendation Evaluatestructuraloptionstocentralizecontractadministrationresponsibilities.

RolesandResponsibilities

Finding ThecontractmanagementrolesandresponsibilitiesoftheProcurementandContractsDivision(P&CD)andoperatingdepartmentpersonnelareinformalandinsufficientlyarticulated.

Recommendations Restructureandformalizerolesandresponsibilitiesforallindividualswitharoleincontractmanagement.

EstablishacontractcompliancemonitoringfunctionwithintheInternalAuditDivision.

CreateacontractperformanceandqualityassurancerolewithinP&CD.


PoliciesandProcedures

Finding Formalcontractmanagementpoliciesandproceduresareinsufficientandnotfullyunderstood.

Recommendations Expandandformalizetoolkitandguidelines,formalizeagency‐levelpoliciesandprocedures,andincorporateinaProcurementandContractingManual(PCAM)update.

Developaguidetoprojectmanagementforoperatingdepartments.

Developandformalizeapost‐contractreviewprocess.

Training

Finding Agencystaffhasbeenprovidedminimaltrainingincontractmanagementbestpractices,policiesandprocedures,andguidelines.

Recommendation Providerole‐specifictrainingtopersonnelwithresponsibilityandauthorityforgoodsandservicescontractadministrationandprojectmanagement.

Systems

Finding AgencyfinancialandITsystemsarenotwidelyutilizedtosupportcontractadministrationandprojectmanagement.

Recommendations Developandprovideregulartrainingtoapplicablepersonnelthataddressesaccountingandreportingsystemsneededtoeffectivelyperformcontractmanagementduties.

Expandtheuseofexistingsystemcapabilitiestoautomateprocessesthatsupportcontractmanagementresponsibilities.

Documentation

Finding Department‐levelcontractworkingfilesanddocumentationdonotadequatelysupportstrongcontractadministrationandprojectmanagement.

Recommendation Developacentralizedrepositoryforworkingcontractdocumentswithindepartments,andestablishregularDivision‐andDepartment‐levelreportingoncontractstatus.

Accountability

Finding SoundTransitdoesnottrackcontractadministrationperformancemetricsorleverageperformance‐basedcontracting.

Recommendations DevelopandreportonkeycontractadministrationperformancemetricstoExecutiveManagementandtheAudit&ReportingCommitteeviatheannualP&CDbudgetscorecard.

Utilizeperformance‐basedcontractingmodelstoimprovevendoraccountability.


II. BACKGROUND, SCOPE, & METHODOLOGY

A. BACKGROUND

SoundTransitoperationsutilizesa “contractingout”businessmodel for theprovisionofmanygoodsand services, relying on contractors rather thanhiring employees. These contracts encompass goods,services,andaspectsoftheAgency’scapitalprogram.Forexample,othertransitagenciesprovidemanyof Sound Transit’s operating services; construction contractors implement capital programs such asLink Light Rail; and service contractors deliver services such as security, vehicle maintenance,marketing, and landscaping. Contractmanagement at SoundTransit is governedby agencyPolicies5and6,Resolution78‐2,theProcurementandContractsAdministrationManual(PCAM),andapplicablefederalandstateregulations.

Therewere581activegoodsandservicescontractsatthetimethisauditwasconducted,withatotalcommitment,orbudgetedvalue,of$326million.

Department Contracts Value

Communications&ExternalAffairs 50 $7,347,209

DECM 59 $25,206,824

Executive 82 $8,592,209

Finance&IT 142 $57,466,221

Legal 63 $29,113,120

Operations 169 $195,082,653

Planning,Environmental,&ProjectDevelopment 16 $3,299,967

AsofMay2013,$176.5millionhadbeenspentagainstthesecontracts.Contractsareadministeredinadecentralized manner, with the Procurement and Contracts Division (P&CD) primarily providingsupport throughout the procurement process, while the operating departments conduct contractadministrationasanadditionaldutyassociatedwithmanaging theirprojectsand functionalareas.Asthe Agency continues to grow in assets and service, the number and value of goods and servicescontractsisexpectedtoincrease.

Sound Transit elected to conduct this performance audit of post‐award goods and services contractmanagement as part of its commitment to continuous improvement,which includes other initiativessuch as revising agency policies, developing new procedures for day‐to‐day operations, and


implementing system upgrades for accounts payable automation. Previous audits conducted by theAgencyhave addressed the contractingprocess, such as ablanketpurchase order audit conducted inNovember2012.Changestocontractingguidelinesandprocessesareongoing.TheDirectorofP&CDisworking closely with the Accounting Division to develop training and guidelines for contractmanagementthatwereinitiallyprovidedtoallcontractmanagersatSoundTransitinMay2013.

B. SCOPE

Thepurposeofthisindependentanalysisofpost‐awardgoodsandservicescontractmanagementistoassist management and those charged with governance and oversight to improve operations andperformance,facilitatedecisionmaking,andcontributetopublicaccountability.Themajorobjectivesoftheauditareto:

EvaluateSoundTransit’spost‐awardgoodsandservicescontractmanagementpractices;and Providerecommendationsforpotentialcontractmanagementimprovementopportunities,with

afocusonAgencybusinesspracticesthat:o Establish, monitor, and control contracting processes and procedures to ensure

performanceandcompliancewithkeytermsandconditions;o Establish and communicate roles and responsibilities for all parties involved in

contractingprocesses;o Trainmanagers and administrators regarding roles and responsibilities and the tools

availabletoassistthem;o Ensureadequateinformationisavailablefordecisionmakingandreporting;o Enableefficientandeffectivedeliveryofgoodsandservices;ando Identify appropriate knowledge, skills, and abilities for staff positions involved in

contractmanagement.

Therearethreetypesofcontractswithinthescopeofthisaudit.Theyinclude1)blanketcontracts,2)single‐servicecontracts,and3)contractsthatrepresentstand‐alonepurchaseorders.TheauditdidnotreviewcapitalprojectcontractsmanagedbyDesignEngineeringandConstructionManagement(DECM),whichareadministeredbytheProjectControlsDivision.Theareasoffocusforthisauditofactivegoodsandservicescontractsincluded,butwerenotlimitedto:

Keycontractterms Contractmonitoring,control,modifications,extensions,andtermination Completionreports Documentationandreporting Disputeresolution Paymentprocess

For the purposes of this audit, contract management is defined as: Post‐contract award, 1) theadministrationofcontractsmadewithvendorsand2)themanagementofassociatedprojects.Specificactivitiesaredetailedbelow:


1. Contractadministration:Thepost‐awardadministrationofcontractstoensurecompliancewiththetermsofthecontractbyboththecontractorandthegovernmentalentity.1SpecificcontractadministrationdutiesvarybetweencontractsandareoutlinedinFAR42.3andtypicallyinclude,butarenotlimitedto:

Reviewandapproveordisapprovethecontractorrequestsforpaymentunderprogresspaymentorperformance‐basedpaymentclauses;

Ensurecontractorcompliancewithsmallbusinesssubcontractingplansandany laborsurplusareacontractualrequirements,andmaintaindocumentationofthecontractor’sperformanceunder,andcompliancewith,theseplansandrequirements;

Support the operating departments regarding contract reviews, status, performance,andactualoranticipatedproblems;

Negotiateandexecutesupplementalagreements;and Manageevaluationsofcontractorperformance.2

2. Projectmanagement: The post‐award management of the schedule, budget, and quality of aproject.3Projectmanagersperformvendormanagement,performanceassessment,andqualityassurancetasks,whichtypicallyinclude,butarenotlimitedto:

Developingtheprojectcharter,preliminaryscope,andprojectplan; Executingtheprojectandproducingorverifyingreceiptofdeliverables; Monitoring the progress of the project, integrating change controls, and closing the

project; Defining,verifying,andcontrollingthescopeoftheproject; Managingprojectcommunications,resources,time,cost,andquality; Performingvendormanagement;and Managingrisk,includingidentifyingrisksandplanningriskresponse.4

The definitions above do not include functions related to accounts payable, including the vendorpaymentprocess.

Procurementpoliciesandpracticeswereoutsideofthescopeofthisaudit.However,thereareanumberof areas where the procurement process impacts contract administration and project management,including awell‐defined scope ofwork, establishing a strong relationshipwith the assigned contractspecialists in P&CD, and understanding the requirements and timing of the contract. Successfulcontracts are based on principles of strong procurement, such as economy, efficiency, effectiveness,fairness,transparency,reliability,andaccountability.Assuch,auditfindingsandrecommendationsmayincludeprocurementactivitieswhereapplicable.

1FTA,BestPracticesProcurementManual2FARSubpart42.3–ContractAdministrationOfficeFunctions3FTA,ProjectManagementOfficeManual4PMI,ProjectManagementBodyofKnowledge


Intergovernmental agreements,which are amajor element of theAgency’s businessmodel,werenotwithin the scope of this audit. However, any changes that are considered as a result of therecommendations in this report should address intergovernmental agreements, budget review,procurement,accountspayable,andotherprocessesrelatedtopost‐awardcontractmanagement.

C. METHODOLOGY

Theauditmethodologyincludedfourphases, including1)Project initiationandongoingmanagement,2)factfinding,3)analysis,and4)reporting.Specificauditactivitiesincluded:

Conductinginterviewsandprocesswalkthroughswithmorethan40SoundTransitpersonnel,representing:

o Agencyleadership;o Individualswith roles in the contracting process, including budget, accounts payable,

diversity,finance,andprocurementandcontractsdivisions;ando Contractmanagerswithintheeightoperatingdepartmentsthatmanageahighvolume

ofcontracts,rangingfrom12to65activecontractsatatime. ReviewingAgencydocumentation,includingpoliciesandprocedures,prioraudits,organization

charts,jobdescriptions,training,andguidelines. Researching best practices in post‐award contract management, from various sources,

including:o FederalTransitAdministration(FTA)o StateofWashingtono ProjectManagementInstitute(PMI)o NationalAssociationofStateProcurementOfficers(NASPO)o NationalContractManagementAssociation(NCMA)o NationalInstituteforGovernmentProcurement(NIGP)o InternationalAssociationforContractandCommercialManagement(IACCM)o AmericanPublicTransportationAssociation(APTA)

Studyingthecontractadministrationstructureandpoliciesofpeertransitagencies. Analyzingasampleof40activegoodsandservicescontractsrepresentativeofcontracttypes,

operatingdepartments,andnatureofgoodsandservicescontracted.

Throughout theproject, theaudit teammetwitha groupof stakeholders representing SoundTransitexecutive leadership, financeandaccounting, facilities, IT,andprocurementandcontracts.Auditteammembersmetcollectivelyandindividuallywithstakeholdergroupparticipants.Thestakeholdergroupvalidated facts, provided input on the feasibility of recommendations, and participated in thedevelopmentoftheactionplan.


D. STATEMENT ON COMPLIANCE WITH GAGAS

Moss Adams conducted this performance audit in accordance with Generally Accepted GovernmentAuditing Standards. Those standards require thatweplan and perform the audit to obtain sufficient,appropriateevidencetoprovideareasonablebasisforourfindingsandconclusionsbasedonourauditobjectives. We believe that the evidence obtained provides a reasonable basis for our findings andconclusionsbasedonourauditobjectives.


III. FINDINGS AND RECOMMENDATIONS

A. PRIMARY FINDING

GoodsandservicescontractmanagementpracticesareinconsistentacrossSoundTransit.

AsofMay2013,120personnel across eightoperatingdepartmentsmanaged581goodsand servicescontractswithin the scope of this audit,with a total budgeted value of $326million.Due tomultipleintersecting causes, the practices in place to administer these contracts are inconsistent across theAgency.Thesecauses,presentedinpriorityorder,are:

1. Decentralization: Responsibility for administration of goods and services contracts is broadlydispersed,involvingprojectmanagerswithinmultipleoperatingdepartmentsordivisions.

2. Roles and responsibilities: The roles and responsibilities of P&CD and operating departmentpersonnelareinformalandinsufficientlyarticulated.

3. Policies and procedures: Formal policies and procedures are insufficient and not wellunderstood.

4. Training: Agency staff has been provided minimal training in contract administration andprojectmanagementbestpractices,policiesandprocedures,andguidelines.

5. Systems: Agency financial and IT systems are not widely or effectively utilized to supportcontractadministrationandprojectmanagement.

6. Documentation: Department‐level documentation does not support strong contractadministrationandprojectmanagement.

7. Accountability: Neither accountability or performance reporting functions related to contractmanagementareinplaceatSoundTransit.

As a result of these causes, project managers within operating departments administer contractsindependently, in the manner most effective for them, with varying levels of management or P&CDoversight. The current goods and services contracting process requires operating departments torequest assistance from contract specialists within P&CD, who accordingly provide varying levels ofsupporttooperatingdepartmentpersonnel.SoundTransit’scontractmanagementmodelcouldassumelessrisk,bemoreeffectiveandefficient,andhavestrongercontrols.

It is important to note that thewidely varying contracts in place at SoundTransit are a contributingfactortothisfinding.Asnotedabove,therearemultiplevariationsofcontracttypes,thenatureofgoodsand services rendered, and the scopes, schedules, and budgets of goods and services contracts. Inaddition, funding agencies like the FTA have specific requirements that also impact contract scopes,schedules, and budgets to varying degrees. As such, there is no “one size fits all” approach thatwillsatisfythevariousneedsofall581goodsandservicescontracts.


Recommendation:Minimizeriskbymaximizingconsistencyacrossgoodsandservicescontractmanagementpractices.

SoundTransit leadership should take action tomaximize consistency andminimize risk in the goodsandservicescontractmanagementprocess,byaddressingbothinconsistentcontractadministrationandprojectmanagement.AstheAgencycontinuestogrowandassetsage,theoperationsandmaintenanceburden on operating departmentswill increase, aswill contracting activities. Consistency in contractadministration and project management across the agency is critical to achieving desired results,successfulvendorrelationships,andmanagingcosts.

InMay2013,P&CDandAccountingpreparedcontractmanagementguidelinesandproceduresaimedatimproving consistency across the Agency. A mandatory training was also delivered to all contractmanagersonthenewguidelinesandprocedures.Thesearestrongstepstowardgreaterconsistency,butsignificantworkisstill tobeaccomplishedtoestablishmoreefficientandeffective, lessriskycontractadministrationandprojectmanagementprocedures.

ThesubordinatefindingsandrecommendationsarticulatedbelowandtheactionplanlocatedinsectionIV of this report detail specific action steps tomaximize consistency in policies andpractices. To theextent possible, guidelines andprocedures shouldbe standardized and formalized.Where exceptionsarenecessary,aswithlegalcontracts,effortshouldbemadetoprovidevisibilitytoP&CDofthecontractadministrationprocess.

B. SUBORDINATE FINDINGS Decentralization

1. Finding: Responsibility for administration of goods and services contracts is broadlydispersed,involvingprojectmanagerswithinmultipleoperatingdepartmentsordivisions.

GoodsandservicescontractsatSoundTransitaremanagedinadecentralizedmanner.Resolution78‐2delegates procurement and contract administration responsibilities to the CEO,who, in turn, has theauthority to delegate to employees to act as purchasing and contracting agents. A “responsiblemanager,” typically the requesting division director, is assigned ultimate authority over eachprocurement, but the level of involvement of division directors varies by contract and is typicallyminimal.Procurementsandsubsequentcontractsareusuallyinitiatedandmanagedbytherequestingprojectmanager or assigned to an individual with themost subjectmatter expertise. Agency policy,which does not specifically assign procurement or contract administration authority to the P&CDDirectororstaff,isacontributingfactortodecentralizedcontractadministration.

For each good or service procurement, two key Agency personnel are assigned: a contract specialistfrom P&CD and a projectmanager from the relevant department. The contract specialist is assignedbased on availability and timing. Some departments with high contracting needs, including IT,Communications, and Facilities, work with a single point of contact. Post‐award, the day‐to‐dayresponsibilityforcontractadministrationresideswithineachdepartment,andP&CDisinvolvedwhenrequestedtoprovideassistance.


Decentralized contract administrationhas resulted in awide spanof control at SoundTransit.Of theAgency’s682personnel,18%(120)aredesignatedcontractmanagers.Anystaffmemberassignedbytheirdivisionmanagercanbeacontractmanager.Mostarehiredasprojectmanagerswithsomesubjectmatter expertise over the contracts they are subsequently assigned to manage. There are norequirements for specific education, training, or experience for contractmanagers. In a fewdivisions,informal policy restricts less‐experienced personnel from contract administration or projectmanagement;however, theagencynormis thatcontractsaremanagedbybothentry levelandseniorstaff.Asaresult,theexperience,skills,andknowledgeofcontractmanagerscandiffersignificantlyevenbetween individuals with the same title, in the same department. This leads to inconsistency in theproceduresandsystemsusedbycontractmanagers,aswellasthelevelofdocumentationtheymaintaintooverseetheircontracts.

SoundTransithasastrongrecordofcompliancewithfundingrequirements.However,stafflackingfullknowledgeofcontractualobligationscouldputSoundTransitatrisk,bothoflegalactionandoflosingfederalandstatefundingasaresultofnoncompliance.Insomedepartments,administrativepersonnelmonitorcontractbudgets, schedules,andexpiration. Inotherdepartments, contract specialistswithinProcurement&Contractsprovidecontractadministrationassistance,includinginvoiceprocessing.TheITDivisionrecentlyhiredaBusinessManagerwithspecificresponsibilityforassistingprojectmanagerswith contract administration. However, this type of role is an exception to the norm, since mostcontractsareadministered,andassociatedprojectsmanaged,byindividualsinthemannerthatworksbestforthem.

Decentralizedcontractadministrationallowstheoperatingdepartmentsmoreautonomyandflexibilitytomeettheiruniqueneeds,butitalsocreatesagreaterriskoffailureifcontractadministrationcapacityisnotstrongandreinforcedwithformalpoliciesandprocedures,frequenttraining,andaccountability.Withmost staff infrequently using agency systems like E1 (Enterprise One ERP) and BOE (BusinessObjects)Reporting, there isagreaterchance forerrorormisreporting.AsSoundTransitcontinuestogrow and mature, the Agency’s assets will both increase in number and age, requiring a greaterattention to operations and maintenance activities, a vast majority of which are contracted out.Consequently, there is a growing need for consistency, capable staff, and capacity‐building programsaddressingcontractandprojectmanagement.

1. Recommendation: Evaluate structural options to centralize contract administrationresponsibilities.

Sound Transit should evaluate contract administration resources and allocation to assess structuraloptions and the appropriate level of Sound Transit staffing and resource allocation for a morecentralizedcontractadministrationmodel.Anevaluationofcontractadministrationresponsibilitiesandprocedures should also consider related activities, such as budget oversight, procurement, andintergovernmental agreement review. The evaluation should consider, but not be limited to, thefollowingelements:

Integration of other planning processes, including the Agency’s strategic plan, budget, andhumanresourcesplanning.

Analysisofworkflowsandbusinessprocessesbycontracttypeandfunction.


Specificresponsibilitiesforpost‐awardcontractadministrationandprojectmanagementshouldresidewithinSoundTransit,P&CD,andoperatingdepartments.

Workforcesupplyanalysis, includingacurrentworkforceoverviewwithexpectedretirementsandattrition,andidentificationofthecapabilitiesandcapacityofcurrentcontractspecialists.

Workforceneeds,includinganycompetenciesandexperienceneeded. TargetservicelevelstobeprovidedbyAgencypersonnelandtherequiredworkloadtoachieve

theseservicelevels. Gapanalysis. Policychangesorenhancementstoassignappropriateauthorityandresponsibility. Strategiesandactionstoaddressneededandsurplusskills.

AmorecentralizedcontractadministrationmodelwouldresultingreaterconsistencyandlowerrisktotheAgency.Amorecentralizedmodelcouldtakevaryingforms,whichinclude,butarenotlimitedto:

FullycentralizingcontractadministrationresponsibilitiesandauthoritywithinP&CD; Fullycentralizingcontractadministrationresponsibilitiesandauthoritywithinanothersupport

department; Utilizing a combination of centralized contract administrationwithin P&CD or other support

department and contract administration within some operating departments with large orlabor‐intensivecontracts,suchastheOperationsDivision;or,

Placing contract administration personnel within each operating department with jointreportingtoP&CDandoperatingdepartments.

A fully centralized contract administration within P&CD would likely produce the most consistent,transparent, and predictable results for P&CD, operating departments, Agency management, andvendors. Through such a model, contract administration responsibility and authority would residewithin P&CD, and project management responsibility and authority would reside within operatingdepartments. This model aligns with the FTA Best Practices Procurement Manual, as well asrecommendations by many industry associations, including APTA, PMI, and NIGP.5,6,7 See Finding 2:RolesandResponsibilitiesformoreinformation.

A partially centralized contract administrationmodel is in place at CapitalMetro in Austin, TX. Thismodeldiffers fromSoundTransit’s in that it centralizessomecontractadministrationresponsibilitieswithin the operating departments. In 2012, Capital Metro established a six‐member centralized“ContractPerformanceTeam”withintheOperationsDivisionto“ensurethatsolidcontractmonitoringplansareimplementedincludingprocessestosupportasoundQualityAssurance(QA)/QualityControl(QC)program.”

Anyorganizationalchangeswill take time todesignand implement.Appropriatechangemanagementsupport will be essential to implementation success. While structural options are assessed, the

5APTA,BusProcurementGuidelines6PMI,ProjectManagementBodyofKnowledge7NIGPResolution1002:CentralizedPurchasing


recommendationsprovidedbelowcanbegintobeimplemented,whichwillimproveconsistencywithinbothP&CDandoperatingdepartments.

Roles and Responsibilities

2. Finding: The contract management roles and responsibilities of P&CD and operatingdepartmentpersonnelareinformalandinsufficientlyarticulated.

Until the materials and training introduced in May 2013, the expectations for, and roles andresponsibilities of, individuals participating in contract management were not articulated by SoundTransitmanagement.However,thesematerialsapplymainlytotheresponsibilitiesduringtheinvoicingandpaymentprocesses,notthedutiesofcontractadministrationandprojectmanagement.Inaddition,these roles and responsibilities are not aligned with a more centralized contract administrationapproachasrecommendedinFinding1:Decentralization.

The following departments and individuals are typically involved in contract management: P&CDContract Specialists (ContractManager and P&CDDirector as needed), operating department projectmanager and/or businessmanager/administrative staff (division directors and executive director asneeded),DiversityProgram(asneededforsmallbusinessvendorrelations),andAccountsPayable.

Ananalysisofasampleofjobdescriptionsrevealedaninconsistentapproachtocontractmanagementresponsibilities for division directors, who are designated “responsible managers,” ultimatelyaccountable for contractmanagement in theirdivisions.Of twelvedirector andexecutivedirector jobdescriptionsreviewed,onlyfivedetailedcontractoversightresponsibilities.Theyincludedthedirectorsof Community Outreach, Operations, Facilities and Asset Control, Operations Support Services, andPlanningandDevelopment.Theremainingseven,withnocontractoversight in their jobdescriptions,includedtheHumanResourcesDirector,whosedivisionmanages37contractswithinthescopeofthisaudit,withabudgetedvalueof$4.1million;andtheDirectorofITOperations,whosestaffmanages48contractswithinthescopeofthisaudit,withabudgetedvalueof$12.2million.

Conversely, the job descriptions of Senior Contract Specialists, who make up the majority of P&CDprocurement staff, detail specific post‐award contract administration responsibilities that are, inpractice,currentlyprovidedbyoperatingdepartmentprojectmanagers.Thesedutiesinclude:

Administersassignedcontracts inaccordancewithcontractual termsandconditions,Agency’sinternalpoliciesandresolutions,FTACircular,andapplicablestateandfederallaws.

Administersassignedcontracts toensurecompliancewithcontractualrequirements includingdeliverables,schedule,quality,cost,notices,insurance,etc.

Reviews and processes invoices for payment consistent with contractual requirements andAgency’spoliciesandprocedures.

Negotiatescontractprices,termsandconditions,modificationsandchangeorders.

As a result of the unclear departmental roles and responsibilities for contract management, Agencypersonnel reported not understanding the appropriate role of P&CD in the contract administrationprocess. The level of involvement in contract administration by P&CD contract specialists varies by


operating department and individual, and appears to be in response to the level of experience ofoperatingdepartmentprojectmanagersandtheirworkload.

Sound Transit also lacks a formal contract compliance role and does not perform regular qualityassurancereviewsofcontractsandvendors.Whilecontractcostauditingofcapitalprojectsisconductedonasamplebasis,andspecificcontractshavebeenauditedaspartof internalauditactivities,routinecompliance monitoring of goods and services contracts is not a current practice. Both contractcomplianceandqualityassuranceprovidetheopportunityforimprovedefficiencyandeffectiveness,aswellascostsavingsandreducedrisk.

2a.Recommendation:Restructureandformalizerolesandresponsibilitiesforallindividualswitharoleincontractmanagement.

Goods and services contractmanagement can require input frommultipledepartmentswithin SoundTransit, including P&CD, operating department project managers, administrative staff, legal anddiversitystaff,riskmanagement,andexecutives.Ashift towardamorecentralizedmodelwillrequireclearlydefinedrolesandresponsibilitiesforeachparticipantinthecontractprocess.Relevantcontractadministrationandprojectmanagementresponsibilitiesshouldbeincorporatedinjobdescriptionsandannualperformancereviews.Theresourceassessmentrecommended inRecommendation1will fullyinformrolesandresponsibilities.ToalignwiththeFTABestPracticesProcurementManualandotherindustrybestpractices,andtoadheretoamorecentralizedcontractmanagementmodel,recommendedrolesandresponsibilitiesforindividualsinvolvedincontractmanagementinclude:

Contract Administrator: Provides cradle‐to‐grave procurement and contract administrationservices, includingnegotiationoftermsandconditions,reviewofdeliverablesandinvoicesforcompliance,administrationofchangeorders,andcontractcloseout.Leadspost‐contractreview.MonitorsandprovidesBOEreportsonscheduleandbudgetstatusonaregularbasistoprojectmanagers. Responsible for maintaining official contract file. (See Finding 3: Policies andProceduresformoreinformation.)

ProjectManager:Withintherequestingoperatingdepartment,actsastechnicalrepresentative,providingsubjectmatterexpertisetothecontractadministratorandinterfacingwiththevendoronday‐to‐dayprojectmanagementactivities.Approvesdeliverablesandmanagesbudgetsandschedules.Responsiblefordepartmentworkingcontractfile.(SeeFinding6:Documentationformoreinformation.)

DivisionDirector/DepartmentHead:Oversees,atahighlevel,thescheduleandbudgetstatusofall division/department contracts, and assists project managers as needed, to ensure theAgency’sneedsaremet.

Business Managers or Administrators: Within operating departments, administrative orfinancialpersonnelmayberesponsibleformaintainingthedepartment’sworkingcontractfileson behalf of project managers. Responsible for developing and providing summary‐levelcontractstatusreportstodivisionanddepartmentdirectors.


ComplianceAuditor:WithinInternalAudit,providesregularcompliancemonitoringofcontractsthroughtestingandreporting.(Seerecommendation2bformoreinformation.)

ContractQualityAssurance:WithinP&CD,providessubjectmatterexpertise,providesguidanceon appropriate use of change orders, participates in post‐contract reviews, and compiles anddisseminateslessonslearnedandbestpractices.ResponsibleforAgencycontractadministrationperformance reporting. (See Recommendation 2c, Finding 3: Policies and Procedures, andFinding7:Accountabilityformoreinformation.)

DiversityProgram:ContinuetoprovidesupporttoP&CD,operatingdepartments,andvendorsasneededwhennegotiatingterms,disputes,orpaymentissueswithsmallbusinesses.

Accounting and Budget Divisions: Continue to perform duties that include accounts payable(e.g., invoice circulation, coding, and processing), budget support, and E1 and BOE technicalassistanceasrequested.

Risk Management: Continue to provide support related to contract drafting, review, andnegotiationofindemnificationprovisionsandinsurancerequirements.

Thebenefitsofestablishingclearrolesandresponsibilitiesinamorecentralizedcontractmanagementmodel include greater consistency and predictability throughout the process, amore standard set ofcriteriaagainstwhich toevaluatepersonnel,andgreater transparency foroperatingdepartmentsandvendors.Contractadministratorswithmoreauthorityandresponsibilityover thecontractingprocesswillhavemoreexperiencewitheffectivelyutilizingsystemsandcomplyingwithrequirements,andcanavoid duplication of effort. In addition, refocusing operating department personnel toward projectmanagementbetter leverages their skillsandabilities toeffectivelydeliver thegoodsor services, andcanloweradministrativecosts.

2b.Recommendation:EstablishacontractcompliancemonitoringfunctionintheInternalAuditDivision.

AportionoftheworkoftheInternalAuditDivisionisdedicatedtocontracts,duetoofthelargevolumeand dollar value of contracts the Agency processes. Some of this work is contracted to third‐partyauditors,whichtypicallyappliestocontractcostauditsoncapitalprojects.TheInternalAuditDivision’scontractfocusshouldbeexpandedtoincludecontractcomplianceforgoodsandservices.

Thecontractcomplianceauditor functionshouldbestaffedbyauditorswithspecializedexperience indevelopingandconductingcontractcomplianceauditsinthepublicsector.Ananalysisoftheposition’srequirementsandanticipatedworkloadshouldbeconductedtodeterminetheappropriatestaffingforthisfunction.Responsibilitiesshouldinclude,butnotbelimitedto:

Work with operating departments, Risk Management, and P&CD to identify risks associatedwithcontractualrelationships.

Conduct regular audits of closed contracts to assess compliance with terms and conditions,agency policies and funding entity regulations, controls, documentation requirements, andchangeorderprocesses.


Identifypotentialcostrecoveryopportunitieswhereapplicable. Conductcontractcostauditsofcapital,goods,andservicescontractsaccordingtoInternalAudit

PoliciesandProcedures.

2c. Recommendation:CreateacontractperformanceandqualityassurancerolewithinP&CD.

GiventhelargenumberanddollarvalueofSoundTransitcontracts,efficient,effective,andhighqualitycontract administration is critical to the Agency’s success. The Agency should establish a rolewithinP&CDforcontractqualityassurance.ThisroleshouldbeperformedbyaSeniorContractsSpecialistorContracts Manager with experience analyzing and developing policies, procedures, and performancemetrics.

Dutiesofthecontractqualityassuranceroleshouldinclude,butnotbelimitedto:

Provide contract administration subject matter expertise to contract administrators andoperatingdepartments.

Participate in post‐contract reviews and compile and disseminate lessons learned and bestpractices.

Developandreportoncontractmanagementperformancemetrics. Assistinthedevelopmentoftrainingprogramsandguidelines.

The FTA Best Practices Procurement Manual provides examples of programs to improve vendorperformance,whichSoundTransitcouldalsoconsiderwhenimplementingthisrole.Forexample,NewYorkCityTransit(NYCT)compilesvendorperformancedatatoidentifythe“100Worst”and“Top100”vendors, based on criteria including on‐time performance and maintaining good relationships withcontractandprojectmanagers.NYCTreportsthat these initiativesare“highlysuccessful in improvingvendorperformance.”

SeeFinding3:PoliciesandProceduresandFinding7:Accountabilityformoreinformation.

Policies and Procedures

3. Finding:Formalcontractmanagementpoliciesandproceduresareinsufficientandnotfullyunderstood.

Sound Transit’s current Procurement & Contracts Manual (PCAM), last updated in 2010, providesminimalguidanceongoodsandservicescontractmanagement.Only tenpagesof the100‐pagePCAMare dedicated to contract management, and the PCAM approaches contract management from theperspectiveofcapitalprojects inDECM.For instance,severalroles listed,suchasprojectcontrolsandthe Change Control Board, do not apply to goods and services contract administration or projectmanagement. Audit interviewees reported low utilization of the PCAM, and several thought it was aDECMdocument.

In part due to decentralization and unclear roles and responsibilities, departments, divisions, andindividuals have developed and documented various procedures for goods and services contractmanagement in an assortment ofways.While thePCAM states that “Departments andDivisionsmay


issue their own procedures and forms to supplement [the PCAM] in collaboration with P&CD,”interviews with project managers and contract specialists revealed that procedures were developedmostoftenonanindividualbasis,withoutleveragingtheexpertiseofP&CD.Withoutformalguidelinesandenforcement,thereislittlestandardizationofbothcontractadministrationandprojectmanagementpolicies,procedures,orguidelinesacrosstheAgency.

Current policies and procedures do not require specific projectmanagement or vendor performancemanagementmilestones. The level of effort devoted to vendor performancemanagement also variesbased on the good or service delivered. For example, professional services contracts may requiremilestone deliverables, such as draft reports. Other services, such as landscaping or painting, havehistoricallyrequiredanin‐personreviewofthework.Somecontractorsarerequiredtosubmitphotosofcompletedworkasaqualitycontrolmeasure. Ifacontractor fails toproperlyperformtheworkorcomplywith termsandconditions, thencontractmanagersmayrefusepaymentand involveP&CDtoresolvedisputes.However,thereisnotadefinedprocesswithlevelsofmateriality.

InMay 2013, P&CD and Accounting produced a series of guidelines and documents to assist projectmanagerswithgoodsandservicescontractmanagement.These includedcontractguidelines,contractmanager’s checklist, contract roadmap, contract manager’s “quickguide” to responsibilities, and aninvoiceandpaymentmanagementrolesandresponsibilitiesmatrix.P&CDprovidedmandatorytrainingon these documents, and instituted a policy of conducting formal “contract handoff” meetings uponaward tohandovercontract responsibilitiesand thecontract roadmap to theprojectmanager.P&CDrequires all project managers to sign the contract management guidelines to acknowledge that theyhave read andunderstand the guidelines. It is too early to assess the impact of thesenew items, butFacilitiesstaffnotedtotheauditteamthatthehandoffmeetingsandcontractroadmapsarehelpful.

The guidelines, checklists, and policies introduced in May are a strong first step toward achievingconsistent, well‐understood policies and procedures related to goods and services contractmanagement.However,thenewprocedureshavenotyetbeenformalized,donotyetapplytoallaspectsofthecontractingprocess,anddonotalignwiththePCAMorjobdescriptions.Inaddition,thesepoliciesand procedures are not aligned with a more centralized contract administration approach asrecommendedinFinding1:Decentralization.

3a.Recommendation: Expand and formalize contract management toolkit and guidelines,formalize agency‐level policies and procedures, and incorporate in a Procurement andContractingManual(PCAM)update.

Writtenpolicies andprocedures serve as a guide to contract administrators andprojectmanagers toensureaconsistent,high‐qualitycontractmanagementprocess.Keycomponentsshouldinclude:

Contract administration plan: A high‐level summary of planned and completed activities thatcanbeusedthroughoutthecontractperiodasastatusreport.Itshoulddetailthemethodsandperformancemeasuresthatthecontractadministratorandprojectmanagerwillusetomonitorthe vendor and their specific responsibilities. The existing contract roadmap should be acomponentofacontractadministrationplan.


Contract kickoff meeting: Also referred to as a pre‐performance conference, the contractspecialist, projectmanager, and vendor shouldmeet to review contract terms and conditionsanddiscusseachother’srolesandresponsibilities.

Project plan and schedule templates: A sample of basic projectmanagement tools for use byoperatingdepartmentsshouldbedevelopedtofacilitatebetterscopeofworkdevelopmentandprojectmanagement.

Contractchangemanagementprocedures:Changeorderadministrationpoliciesandproceduresare presented in the PCAM. Like other procedures, these should be revised to reflect amorecentralized contract administration model and more effectively address goods and servicescontractmanagement.

Dispute resolution procedures: A dispute resolution process should be developed andformalized to define the roles and responsibilities of the project manager, contractadministrator,legaldepartment,anddiversityprogramwhereapplicable.

Invoice and payment processing procedures: The AP automation project currently underwaywillrequirechangestoincorporatetheseenhancedprocedures.

Closeout procedures: Contract closeout procedures are detailed in the PCAM. They should bereviewedforadherencetoamorecentralizedcontractadministrationmodelandapplicabilitytogoodsandservicescontracts.

Post‐contractreview:SeeRecommendation3c.

It is importanttonotethatwhilepoliciesandproceduresarecritical toconsistencyandeffectiveness,they must be formalized, training must be provided, and personnel must be held accountable toadheringtothem.Duetothehistoricallackoftrainingandinsufficiencyofguidelines,andespeciallyiftheAgencychoosestochangetoamorecentralizedcontractadministrationmodel,theneedfortrainingwillbegreaterinthefuture.Likewise,aspoliciesandproceduresevolveovertime,trainingshouldberevisedandre‐deliveredtoensureconsistency.

3b.Recommendation:Developaguidetoprojectmanagementforoperatingdepartments.

Effectivecontractmanagementrequires theprojectmanager toobserveperformance, collect relevantinformation, and measure progress against goals. A more centralized contract administration modelrefocuses operational departments on project management. As such, project managers should beprovidedwithtoolstoeffectivelymanageprojectsandvendors.TheAgencyshoulddevelopahigh‐levelguidetoprojectmanagementbestpractices,andhowtomaximizevaluethroughcollaborativevendorrelationships.Projectandvendormanagementtopicsshouldinclude,butnotbelimitedto:

Projectscopingandrequirementsdefinition Negotiationstrategies Budgetandschedulemanagement Changeorderpoliciesandguidelines


Performancemonitoringandreporting Documentationguidelines

At thedepartmentanddivision level, theseguidelinesshouldbeenhanced toapplyspecifically to thetypes of services frequently contracted. The guidelineswill differ greatly between the types of goods(e.g., large format printers vs. paint) and services (e.g., planning consultants vs. skilled trades)contracted. Even within divisions, there will be a range of project and vendor managementrequirements. For example, the IT department may have service level agreements and hardwarepurchaseorderswiththesamevendor.Subsequenttotheirdevelopment,projectmanagersshouldbetrainedtotheseprocedures.

While outside the scope of this audit, strong projectmanagement startswith good procurement. Forexample, a well‐defined scope of work should clearly articulate expectations, requirements, anddeliverables; define terms and conditions that are acceptable and achievable for both parties; andprovide a realistic, collaborative approach to establishing schedules and budgets. Clear channels ofcommunication between the contract administrator and project manager are critical to successfulcontractdelivery.

3c. Recommendation:Developandformalizeapost‐contractreviewprocess.

Atthecompletionofeachcontract,contractadministrators,projectmanagers,andrelevantstaffshouldreviewvendorperformanceandthecontractmonitoringprocess.Thisprocessshouldbefacilitatedbythe contract administrator and include a review of status reports, deliverables, and performancemeasures. The post‐contract review should result in a written vendor performance evaluation.Dependingontheresultsofthepost‐contractreview,aprogrammaticrevieworfinancialauditcouldberecommended.

ThecontractqualityassurancespecialistinP&CDshouldattendpost‐contractreviewsandevaluatetheresults in order to determine lessons learned and Agency best practices in procurement, contractadministration, and project management. Lessons learned should be incorporated into subsequentcontracts,procedures,policies,andtrainingforcontractagencypersonnel.

Institutingstandardpost‐contractreviewswillprovidetheopportunityforbothP&CDandtheoperatingdepartment to share lessons learned, strengthen processes, and increase the cost‐effectiveness offollow‐onorsubsequentwork.Thepracticeofpost‐contractreviewalsoprovidesP&CDtheopportunitytostrengthenrelationshipsandreinforcetrainingandguidelineswiththeoperatingdepartments.Dueto the volume of contracts at Sound Transit, the Agency should consider a dollar value or schedulethresholdforpost‐contractreview,orselectarepresentativesampleofclosedcontractspermonthtoreview.


Training

4. Finding: Agency staff has been provided minimal training in contract management bestpractices,policiesandprocedures,andguidelines.

Historically, contract‐related training at Sound Transit has focused on the procurement process. Allaudit interviewees reported that they had received no on‐boarding or technical training related tocontractadministration.Thelackofstandardtrainingcontributestoinconsistencyincontractexecution,createdbyalackofawarenessand/orunderstandingofpolicies,procedures,systems,andguidelines.

Recently, the Agency has taken steps to provide more training to all personnel. New employeeorientation has been expanded and includes an introduction toAgency procurement and contractingpractices.P&CDhasrecently institutedquarterlyworkshops forall interestedAgencystaff.TheP&CDDirector estimates that 30‐60 personnel attend each session, representing one‐third to one‐half ofcurrentprojectmanagers.ThecontractmanagementtrainingofferedinMay2013wasmandatoryforallcontractmanagersandeligiblefortrainingcredit.P&CDintendstoofferthistrainingannually.

Within P&CD, contract specialists are required to hold CPPB (Certified Professional Public Buyer)certification or equivalent experience. However, there is no annual CPE requirement for contractspecialistsorcontractmanagers.Underamorecentralizedmodel,contractadministratorswouldhaveuniqueresponsibilitiesthatmaywarrantadditionaltraining.

4. Recommendation: Provide role‐specific training to personnel with responsibility andauthorityforgoodsandservicescontractmanagement.

Training in contract administrationandprojectmanagementestablishesabaselineofknowledgeandincreases the likelihood that staff will administer and monitor contracts consistently and reliably.Trainingshouldbemandatoryfornewemployees,andregularrefreshersshouldbeoffered,especiallyas processes and policies change. A baseline level of training and understanding of the contractadministration process, roles and responsibilities, and agency policies should be required for projectmanagers and division and department directors. Likewise, all contract administrators should betrained to an adequate level of expertise on the use of E1 and BOE reports to support day‐to‐daycontract administration and project management. At a minimum, the individuals with roles in thecontractmanagementprocessshouldbetrainedonthefollowingprinciples:

Contract administrators: Agency policies and procedures and relevant regulations; roles andresponsibilities; E1 and BOE reporting for contract administration; procurement andcontracting ethics; compliance; invoices and payment procedures; and best practices. (SeeFinding3:PoliciesandProceduresforinformation.)

Project managers: Contract management processes, roles and responsibilities, and policies;procurement and contracting ethics and riskmanagement; E1 and BOE reporting for projectmanagement;changemanagement;andprojectandvendormanagement.(SeeRecommendation3bformoreinformation.)


Divisionanddepartmentdirectors:Contractmanagementprocesses,rolesandresponsibilities,andpolicies;andprocurementandcontractriskmanagement.

Asnotedpreviously,theinitialtrainingneedsforallagencypersonnelmaybehigherthanfutureneeds,especially during and following an organizational change. To ensure that expertise is developed andmaintained, the Agency should establish an annual training requirement for contract specialists andproject managers. For example, the federal government encourages project managers serving asContracting Officer’s Representative (COR) to complete a minimum of eight hours of contractadministrationtrainingeverythreeyears,andmanyfederalagencieshaveestablishedmandatoryCOTRtrainingprograms.8

Systems

5. Finding: Agency financial and IT systems are not widely utilized to support contractmanagement.

SoundTransitmaintainsseveralsystemsthatsupportcontractadministrationandprojectmanagement:E1, theenterprise resourceplanningsystem;BOE,business intelligencesoftware;andLivelink,whichcontainsofficialcontractfiles.Auditintervieweesprovidedconsistentfeedbackthatthesesystemswerenotuser‐friendly, toocomplicated,andunder‐utilized.P&CDpersonnelreportedthatE1querieswerelessaccuratethanBOEreports,andtheyoftenaskedFinancetoperformthequeriesduetotheirownlackofsystemexpertise.TheE1systemandBOEreportsareusedtovaryingdegreesacrosstheAgency,with Finance and IT personnel using them most frequently. Many operating department projectmanagersdonotmanageenoughprojectstodriveregularsystemaccess,sotheydonotdevelopcomfortwiththesystems.

A weekly E1 open house is co‐hosted by Finance and P&CD; however, it appears that the operatingdepartmentpersonnelwhocurrentlyadministercontractsareeithernotreceivingorsolicitingsupport,because they are not utilizing the system.During the interview phase of this audit, only one currentproject manager reported using BOE queries to retrieve contract financial information. All otherindividualsreportedsettingup theirownspreadsheetsorother trackingsystemstomonitorcontractdata,includingbudgetsandexpenditures,rates,invoices,andpurchaseorders.Theresultsofthesedualsystemsareredundantactivities,inefficientprocesses,andpotentiallyinaccurateinformation.

A recent survey of E1 users revealed significant training needs. Respondents were asked to listenhancementsthatwouldenablethemtobetterutilizetheE1system.Ofnote,manyoftheneedsrelatedtocontractadministrationandprojectmanagement,whichincludedPOandcontractbalances,vendorpayment, and electronic contract files. These are existing capabilities within E1, BOE reporting, orLivelink that staff appears to be unaware of. The survey also asked respondents to list E1‐relatedtrainingneeds.

8FARSubpart2.1–Definitions


Needsthatappliedtocontractmanagementinclude:

Role‐specifictrainingfornewemployees Rolesandresponsibilitiesofcontractspecialist,contractmanager,andapprovers Howtoprocesschangesandapprovals Rolesandresponsibilities Blanketreleases Howtoensurethatinvoicesarepaid Invoiceprocessing

Whileanautomatedaccountspayableproject is currentlyunderway,automatedbudget andschedulealertsandworkflowtrackingforprojectmanagementwerealsolistedasdesiredsystemenhancements.Theopportunity forautomationwasmentionedmost frequently in termsofcontractexpirationdatesandbudgetalerts.WhileAccountingprovidesamonthlyBOEreporttodivisiondirectorsonallpurchaseorderssettoexpirewithin180days,interviewedprojectmanagersdidnotreportlearningofexpirationdates in this manner. The Agency’s eBid system has recently been upgraded and now includes thecapabilitytoprovideautomatedschedulealertsforprojectsover$100,000.

5a.Recommendation: Develop and provide regular training to applicable personnel thataddresses accounting and reporting systems needed to effectively perform contractmanagementresponsibilities.

Sound Transit personnel should be trained to use relevant systems in accordance with their roles.Training should take into consideration to level of system use: infrequent use by employees whomanageoneortwoprojectsayearandmorefrequentusebyemployeeswhomanagemultipleprojectsatatime.Whenexpertiseinsystemsisarequirementoftheposition,experienceand/ortrainingshouldbereflectedinjobdescriptionsandperformancereviews.

As noted in Recommendation 4a, contract administrators should be trained to an adequate level ofexpertisetosupportcontractadministrationactivities.ContractadministratorsshouldbeabletoutilizeE1 andBOE to pull relevant reportswithout the assistance of Finance or IT. Contract administratorsshouldprovideregularupdatesonkeycontractdatatoprojectmanagers.

Within operating departments, project managers should be providedwith step‐by‐stepmanuals andrelated training on how to query E1 and create BOE reports to support project management withaccurate schedule and budget information. Businessmanagers and/or administrative personnel whosupportdepartmentswithhighcontractvolumesshouldalsobetrainedtoalevelofexpertisesufficientto report summary data to division and department directors and query detailed data for projectmanagersasneeded.

SeeFinding4:Trainingformoreinformation.


5b.Recommendation:Expandtheuseofexistingsystemcapabilitiestoautomateprocessesthatsupportcontractmanagementresponsibilities.

SomeelementsoftheprocurementandcontractadministrationprocessesareautomatedinE1,suchasapprovals and requisitions. An accounts payable automation project is currently underway that isexpected to significantly improve invoice and payment processes. The Agency should consider usingsystemcapabilitiesoradjustingbusinessprocessestofurtherautomatecontractadministrationthroughongoing system analyses and planned upgrades. For example, automated invoice tracking systemswouldhelptotrackvouchersandprovideinformationonpaymenthistory.

Asnotedpreviously,auditintervieweesrequestedtheabilitytoreceiveautomatedalertsonexpirationandbudgetstatus.SoundTransitshouldpublicizeandtrainprojectmanagerstousethealertsineBid,anddeterminewhetherE1oreBidhasthecapabilitytoprovidealertsforallcontracts.

TheAgencyshouldinvestigatehowtoenhancesystemstoaccommodatebettercontractadministration.For example, LAMetrohasdeveloped approximately300electronic templates, or “contractwizards,”thatautomatetheprocessofbuildingcontractsand“drasticallyreducethetimecontractmanagersmustspend drafting contract documents… The electronic wizards prompt contract administrators withquestions about a given services ormaterials contract, and by filling in the answers and using someboilerplateclauses, thecontractcanbedraftedveryquickly.Customizationcanbedoneby individualcontractadministratorsasneeded.”9 Inaddition,contract lifecyclemanagementmodulesareavailablefortheE1system.E‐contractingsystemsareutilizedbyothergovernments.

Documentation

6. Finding: Department‐level contract working files and documentation do not adequatelysupportstrongcontractmanagement.

OfficialcontractfilesaremaintainedbyP&CDandaccessibleintheprocurementlibraryoronlineusingLivelink.Atthedepartmentlevel,mostworkingcontractfilesareownedbytheprojectmanager,withlittle standardization evenwithin divisions. Contract documentation is sufficient to create an officialcontract file,but the levelofworkingdocumentationandtrackingvariesdependingonthe individual.Auditintervieweeswhoallmanageatleast10contractswithinthescopeofthisauditreportedmyriaddocument management and tracking practices including network folders organized by contractexpiration date, spreadsheets, Word documents, handwritten lists, and printed binders. Fewinterviewees reported sharing their organization system, process, documentation, or lessons learnedwithpeers.

Mostdivisionshavecentralfilelocationsbutnopoliciesorguidelinesforcontractdocumentretention.Departmentsalsodonotappeartohavedepartment‐level,summarizedcontractdataavailable,althoughthe Finance Department provides a monthly expiring PO report to division directors. The FacilitiesDivision maintains a spreadsheet showing all active, closed, and anticipated future contracts and

9NCMA,ContractManagementMagazine,January2007


purchase orders. Information for each contract includes current status, scope summary, assignedpersonnel,contractandPOnumbers,accountcodes,expirationdatesbasedonschedule,burnrateandexpectedexpirationdate,budgetsandexpenditures,andchangeorders.

The administrative costs ofmaintainingmultiple documentmanagement and tracking processes andsystems are high. Lack of standard documentation and department‐level tracking can lead toinefficiencies and project management difficulties. For example, if clear documentation is not keptrelated to communications and deliverables, then dispute resolution can be complicated. In addition,reliable division‐ and department‐level contract tracking could improve management oversight andoperationalefficiency.

Oftencontracts,especiallyOB(blanket)contracts,areinheritedbyanewemployee,withvaryinglevelsof documentation and orientation. Without standardized documentation and tracking mechanisms,contractsmaybeatriskofexpirationandservicelapse.Severalintervieweesreportedthatoneormoreoftheirinheritedcontractshadexpiredwithouttheirknowledgeduringtheirfirstyearonthejob.ThereisalsoariskofexpirationifaprojectmanagerdoesnotreceiveanexpiringPOreportfromtheirdivisiondirector,asprocurementguidelinesrequireanoticeof120daysforanewrequisitionand60daysforacontractextension.

6. Recommendation:Developacentralizedrepository forworkingcontractdocumentswithindepartments, and establish regular Division‐ and Department‐level reporting on contractstatus.

Where feasible, contract management should be supported by systems that store key contract data,includingexpirationdatesandfinancialdata,toenablecontractadministratorsandprojectmanagerstoextendcontracts,exerciseoptionyears,orprepareforanewprocurementinatimelymanner.DivisionDirectors are ultimately responsible for contract compliance and project success, and key contractinformation,suchasexpirationdatesandbudgetstatus,shouldberegularlyreviewedinsummaryform.Thisdata isaccessibleviaBOEreports,whichshouldbeusedbydivisionsanddepartmentstoreviewcontractscheduleandbudgetstatusonaregularbasiswithassignedcontractspecialists.Forexample,Facilities meets every two weeks with P&CD to review all open contracts and discuss any issues.Contract specialists should also regularly provide detailed contract‐specific data to projectmanagers.(SeeFinding7:Accountabilityformoreinformation.)

Workingcontractfilesshouldbeorganizedsothatcontracthistorycanbeunderstoodintheabsenceoftheprojectmanager.TheFTA’sBestPracticesProcurementManualstates:

It is goodpractice for the procurement official tomaintain the “official” contract file. The“official” filewould includeallofficialcorrespondencerelatingtotheadministrationof thecontract so as to verify the contractor’s adherence to the terms of the contract anddemonstrate that theagency is followinggoodadministrativepracticeandsoundbusinessjudgment in settling all contractual and administrative issues arising during contractperformance.

P&CDshouldcontinuetohostofficialcontractfiles.Thesefilesshould,ataminimum,includethesignedand executed copy of the contract, any contractmodifications or stopwork documentation, proof of


payment,prevailingwagesstatement,finalacceptancereport,andcloseoutdocumentation.Thesefilesare not sufficient for a new project manager or contract administrator to understand a contract inprogress,soeachdepartmentshouldmaintainarobustworkingfileoneachcontract.

Sound Transit should utilize existing document management resources to develop a standard,centralized, accessible location for all department‐level working files. P&CD should work with theRecordsManagerandoperatingdepartmentrepresentatives todetermine themosteffectivestandardfolderstructureandorganizationalpoliciesfordepartmentcontractfilestobestoredonSharePointoranotherdocumentmanagementsystem.Theworkingfilesshouldbestoredchronologicallyandinclude,butarenotlimitedto:

Externalandinternalcorrespondence:Allrelevantcorrespondenceshouldbedatedandstored.Telephonelogsmayberelevant.

Meetingminutes Copies of deliverables, photographs, 360 reports, or other documentation of vendor

performance. Progress reports: Progress reports should include deliverable, schedule, and budget status;

identify potential risks; identify any variances between planned and actual performance; andshowvendorachievementofperformancemetrics.

Contractchanges Project history: If a project is large, such as a multi‐year implementation, has multiple

stakeholders, has or will be experiencing a leadership change, or has a history of strainedvendor relations, then itmaybe appropriate for theprojectmanager to keep a chronologicalprojecthistoryrecordingthefactsoftheprojectasitprogresses.

Contractchecklists,workbreakdownstructure,andotherprojectmanagementtools. Proofofcompletionofworkandcontractcloseoutchecklist.

Accountability

7. Finding: Sound Transit does not track contract administration performance metrics orleverageperformance‐basedcontracting.

SoundTransithasastrongcultureofaccountabilitythroughregularreportingtotheAudit&ReportingCommittee,annualmilestonereporting,andquarterlydivisionalperformancereportingtotheExecutiveTeam in budget documents. P&CD reports on several procurement metrics, but there are noperformancemetricsrelatedtocontractadministration.Intandemwithcontractcompliancemonitoringandqualityassurance,performancemetricscanhelporganizations toprovideexecutivevisibilityandhelpachievegreaterefficiencyandeffectiveness.

The traditional approach to contracting at Sound Transit, particularly for long‐term contracts, is the“waterfallapproach,”inwhichpaymentisrelatedtocompletionofmilestonesandprojectdeliverables.Goods and services contracts are not established using performance‐based incentives for achievingoutcomes. The use of performance‐based contractingmethods can improve vendor accountability bybetterlinkingcostswithoutcomes.


As noted in prior recommendations, accountability should be reinforced through training on formalpoliciesandproceduresandevaluatingresponsiblemanagersforperformance.

7a.Recommendation:DevelopandreportonkeycontractadministrationperformancemetricstoExecutiveManagementandtheAudit&ReportingCommitteeviatheannualP&CDbudgetscorecard.

TheNIGPrecommendsperformancereportingasabestpractice inpublicprocurementas follows: “Astandard set of metrics that are aligned with strategic goals should be developed and regularlymeasured by all units within the procurement function.” NASPO also recommends contract‐relatedperformancereporting.ExamplesofNIGPandNASPOrecommendedmetricsforcontractadministrationinclude:10,11

Volumeofpaymentstransactedviacontracttype:Blanket,SoleSource,Piggyback,P‐Card,StandAlone,etc.

Contractmanagementoperatingcostsasapercentageofoperatingdepartmentbudgets Responsetimebetweenrequisitionsubmissionandpurchaseorderplacement Processingtimefortaskordersonblanketcontracts Averagevalueofchangeorders Percentageofcontractsexercisingoptionyears Percentageofcontractswithscopeorbudgetchangeorders Numberofgoodsandservicescontractsexecutedannually

7b.Recommendation: Utilize performance‐based contracting models to improve vendoraccountability.

Whendevelopingprojectmanagementguidanceandtraining forprojectmanagers, theAgencyshouldconsiderestablishingpoliciesandguidelinesthatencouragetheuseofperformance‐basedcontracting.Performance‐based contracting can reduce costs and result in better outcomes than traditionalcontracting. Other potential benefits of performance‐based contracting are improved vendoraccountability and improved customer and vendor understanding of performance and deliveryexpectations.

TheNCMAhasdevelopedguidelinesrelatedtoperformance‐basedcontracting.12Pertheseguidelines,keyelementsofperformance‐basedcontractsinclude:

Performancework statement:Ahigh‐level descriptionof theperformance requirements for acontract

Quality assurance surveillance plan: Agency plan tomonitor quality, detailing the individualsresponsibleforcontractadministrationandcontracttechnicalrepresentative,thescheduleand

10NIGP,PublicProcurementPracticePerformanceMeasures,201211NASPO,TheMeasureofOurSuccess12NCMA,ManagementandAdministrationofaPerformance‐BasedContract


methods forcontractadministration,performancerequirementssummary,anddeductionandincentiveformulas

Performance‐basedmetrics: Commonmetrics include return on investment (ROI), return onassets (ROA), total ownership cost (TOC), number of milestones on time, on‐time deliverypercentage,andnumberofdaysfromordertodelivery

Contractual incentives: The most common contractual incentives are specific dollar valuesrelated to cost performance, schedule or delivery performance, and quality performance; forexample,aprojectthatisoverbudgetwouldbepenalized,whichaprojectthatisdeliveredearlywouldreceiveaperformancebonus

Under a performance‐based model, the operating department project manager would serve as theprimary evaluator of the vendor’s progress and actual performance in comparison to the plan,standards,andperformancemetrics.

Performance‐based reinforcement of contract terms and conditions, such as financial incentives andconsequences, can be one of the most effective methods of inducing high vendor performance.ConsequencesforpoorperformancecanprovidetheAgencywiththeabilitytotakedisciplinaryactionagainst a vendor that does not comply with contract terms. For contracts that involve monthly orquarterly payments, the Agency’s standard progress reporting should require a vendor to submitprogrammaticreportsinadvanceoforconcurrentwithitsinvoices.Theprogrammaticreportsshouldbedirectlyrelatedtothetermsofthecontract,reportoutcomesanddeliverables,andusedtodetermineifperformancemeasuresarebeingmet.


IV. ACTION PLAN

Recommendation OwnerPhaseI

1‐6Months

PhaseII

6‐12Months

PhaseIII

12+Months

1. Evaluatestructuraloptionstocentralizecontractadministrationresponsibilities.

DeputyCEO,withP&CD,OperatingDepartments,&Finance

Evaluate,select,anddesigntheAgency’scontractmanagementstructureandcomponentparts,withappropriate,agency‐specificdefinitions,roles,andresponsibilities.

Conductworkforceandresourceallocationstudy.

Implementstructure,procedures,androles.

2a.Restructureandformalizerolesandresponsibilitiesforallindividualswitharoleincontractmanagement.

HR,P&CD,OperatingDepartments

Basedonselectedstructure,reviseandformalizerolesandresponsibilities.

Continuetorefineandprovidetraining.

2b.EstablishacontractcompliancemonitoringfunctionintheInternalAuditDivision.

InternalAudit Studypositionrequirementsandanticipatedworkload.

Staffcontractcomplianceauditorfunction.

2c.CreateacontractperformanceandqualityassurancerolewithinP&CD.

P&CD Studypositionrequirementsandanticipatedworkload.

Staffcontractperformanceandqualityassurancefunction.

3a.Expandandformalizecontractmanagementtoolkitandguidelines,formalizeagency‐levelpoliciesandprocedures,andincorporateinaProcurementandContractingManualupdate.

P&CD Basedonselectedstructure,reviseandformalizepoliciesandprocedures.




1‐6Months

PhaseII

6‐12Months

PhaseIII

12+Months

3b.Developaguidetoprojectmanagementforoperatingdepartments.

P&CD,OperatingDepartments

Establishprojectmanagementworkgroup.

Developprojectmanagementguideandprovidetraining.


3c.Developandformalizeapost‐contractreviewprocess.

P&CD Establishpost‐contractreviewprocedures.

4.Providerole‐specifictrainingtopersonnelwithresponsibilityingoodsandservicescontractmanagement.


Basedonselectedstructure,developandformalizerole‐specifictraining.


5a.Developandprovideregulartrainingtoapplicablepersonnelthataddressesaccountingandreportingsystemsneededtoeffectivelyperformcontractmanagementresponsibilities.

Finance,P&CD

Basedonselectedstructure,developanddeliverrole‐specifictraining.

Continuetorefineanddelivertrainingtonewhiresandexistingemployeestoenhanceskills.

5b.Expandtheuseofexistingsystemcapabilitiestoautomateprocessesthatsupportcontractmanagementresponsibilities.

Finance,IT,P&CD

Continuetoimplementaccountspayableautomationproject.

Studypotentialsystemenhancements.Continuetoimplementaccountspayableautomationproject.

Studypotentialsystemenhancements.Continuetoimplementaccountspayableautomationproject.



1‐6Months

PhaseII

6‐12Months

PhaseIII

12+Months

6.Developacentralizedrepositoryforworkingcontractdocumentswithindepartments,andestablishregularDivision‐andDepartment‐levelreportingoncontractstatus

Deputy CEO,withP&CD,RecordsManagement,OperatingDepartments

Evaluateanddeterminetheparticularagency‐wideanddepartment‐levelimprovementsthatarenecessary.

Establish“workingfile”location,structure,andnamingconventions.Developandformalizeprocedures.

Implementproceduresandprovideassistanceasneeded.

7a.DevelopandreportonkeycontractadministrationperformancemetricstoExecutiveManagementandtheAudit&ReportingCommitteeviatheannualP&CDbudgetscorecard.

P&CD Studypotentialperformancemetricsandexistingdata.

Selectperformancemetrics,collectdata,andreport.

Continuetoreport.

7b.Utilizeperformance‐basedcontractingmodelstoimprovevendoraccountability.


Developguidelinesandtrainingforperformance‐basedcontracting.

Publishguidelinesandprovidetraining.

Identify,track,andevaluatenewprocurementsthatincludeperformance‐basedcontractingfeatures.


V. MANAGEMENT RESPONSE ManagementconcurswiththemajorityofthefindingsandrecommendationsoftheMossAdamsFinalDraftReport.

Our exceptions are relatively minor. We recognize and agree that greater consistency andstandardizationofpost‐awardgoodsandservicescontractmanagementisnecessary.TheMossAdamsreport highlights the need for more centralized contract administration responsibilities. It defines“contractadministration”asasubsetof“contractmanagement.”

Thescaleandscopeofourgoodsandservicesprocurementsandcontractshavegrownsignificantlyinrecent years. Policies and procedures have not been adequately adjusted to keep pace with thisincreasedactivity level.Moving fromcurrentpractices toacentralizedsystem isacomplex issueandourfocuswillbeondesigningthebestsystemforSoundTransitandtransitioningtothatsysteminanefficientandeffectiveway.

Our purpose is to establish a rational, comprehensive and cost‐effective system of post‐awardmanagementofourcontractsforgoodsandservices.ThiseffortbeganinMayofthisyearwithguidanceandmaterialsdevelopedbytheProcurement&ContractsandAccountsPayableDivisionspresentedtoSoundTransitcontractmanagersandassociatedstaffinmandatorytrainingworkshops.

Sinceweconcurwiththerecommendationstoalargedegree,ourspecificobservationsthatfollowarebrief, with only a small number of additions, corrections or exceptions.We support the three‐phaseActionPlanat theendof thereport,asour implementationroadmap,whichmanagementhasstudiedandprovidedinputforthathavebeenintegratedintotheplan.

ParticipatinginthismanagementresponsearetheDeputyCEO,theProcurement&ContractsDivision,theAccountsPayableDivision, and theOperationsDepartment representing theagency’sowner/userdepartmentsofgoodsandservicescontracts.

Recommendations (Nos. 1 thru 7, total of 13):

1. Recommendation: Evaluate structural options to centralize contract administrationresponsibilities.

Managementconcurs.Wewillevaluate, selectanddesignourcontractmanagementmodel in thefirstphaseofthethreephaseimplementationplan.

2a. Recommendation: Restructure and formalize roles and responsibilities for allindividualswitharoleincontractmanagement.

Managementconcurs.Thisiscentraltothedesignandultimatesuccessofourpost‐awardcontractmanagement system.Wewill identify each function and task thatmust be performedunder ourmodel, and allocate themappropriately amongour keyplayers (that is, P&CDivision, theownerDepartments,AccountsPayable,DiversityandLegal)asspecificrolesandresponsibilities.This,in


turn,willleadustotheformulationofourown,agency‐specific,keydefinitions(includingcontractmanagement,contractadministration,projectmanagement,vendorperformancemanagementandinvoice/paymentmanagement).

2b.Recommendation:Establisha contract compliancemonitoring function in the InternalAuditDivision.

ManagementconcursAcontractcompliancemonitoringfunctionisneeded.Thedecisiononwherethiswill be located is dependent on the design of the post‐award contractmanagement system.InternalAuditwill analyze theanticipatedworkloadandappropriate staffing for this functionaspartofitsdevelopmentofthe2014internalauditworkprogram.

2c. Recommendation: Create a contract performance and quality assurance role withinP&CD.

Managementconcurs.Detailsandstructuretobedetermined.

3a.Recommendation:Expand and formalize contractmanagement toolkit and guidelines,formalize agency‐level policies and procedures, and incorporate in a Procurement andContractingManual(PCAM)update.

Managementconcurs.

3b.Recommendation:Developaguidetoprojectmanagementforoperatingdepartments.

Management concurswith the clarification that the high‐level guide to projectmanagement bestpracticesberelevant forprojectmanagers inallSoundTransitdepartmentsthatutilizecontracts(notlimitedto“operating”departments),inaccordancewithourcontractmanagementmodel.

3c.Recommendation:Developandformalizeapost‐contractreviewprocess.

Managementconcurs.Methodandstructuretobedetermined.

4. Recommendation: Provide role‐specific training to personnel with responsibility andauthorityforgoodsandservicescontractmanagement.

Management concurs. Initial training has been developed and implemented. Additional trainingcontentwillbedesignedtoconformto theallocationofrolesandresponsibilitiesselectedbytheagencyduringPhaseI.

5a. Recommendation: Develop and provide regular training to applicable personnel thataddresses accounting and reporting systems needed to effectively perform contractmanagementresponsibilities.

Managementconcurswiththerecommendationtoprovideregulartrainingtoapplicablepersonnelthatincludes and covers an understanding of accounting and reporting systems needed to effectivelyperform contract management responsibilities. Efforts have already started to develop training to


support Contract Management activities and are expected to be rolled out in Q4 2013/Q1 2014.AdditionallytheEnterpriseResourcePlanning(ERP)Systemwillbeundergoingatoolsreleasethatwillsignificantly enhance the user’s experience. Training will be provided to users of the system withspecifictrainingprovidedtothoseperformingcontractmanagementactivities.TheseeffortswillbeledcollaborativelybyAccountingandProcurementandContracts

Following the implementation of changes in response to other findings in this report andimplementationoftheAccountsPayableautomationprojectinQ22014,moredetailedtrainingwillbedeveloped and conducted. Management concurs with the recommendation to develop step‐by‐stepmanuals tosupplement trainingprograms.TheERPstrategicplanningprocess identified traininganddocumentation as a significant gap, specifically identifying within that work plan the need forimplementationofasustainabletrainingprogramtoaddressongoingtrainingneeds.

5b.Recommendation:Expandtheuseofexistingsystemcapabilitiestoautomateprocessesthatsupportcontractmanagementresponsibilities.

Managementconcurswiththerecommendationandcurrentlyhasseveralinitiativesplannedtoimproveand automate areas within the contract management responsibilities. Most significantly, the APAutomationprojectandthetoolsreleasewillbringadditionalfunctionalityorusability,particularlyintheareaofqueryingof information.Projects identifiedwithin theERPStrategicPlan thatwill furtherexpandonexistingsystemcapabilitiesareasfollows:

Implement9.1Tools(improveduserinterface/improvedquerycapabilities)Q42013

E1 Usability Enhancements (implementation of improvements based on prioritized surveyfeedback/Page/OneViewReporting)2014

DeliverTrainingQ32014toQ22015

UpgradeERPApplicationtomostcurrentreleasein2016

RedevelopERPStrategicPlanfornext3to5yearperiod(contractingandsourcingneedsanalysisandalternativessolutionsplanningprioritizedfortheplanupdate)by2017

Followingtheupgradein2016,watchlistandautomatedalertcapabilitieswillbeavailablewithintheprimaryERPsystem.EnterpriseOne,ratherthanEBid,willbeevaluatedforenhancedalertcapabilities.Untilsuchtime,trainingonreportsandothertechniquestoassistprojectmanagerswithbudgetstatusandexpirationwilladdressinformationalrequirements.

Procurement and Contracts will reach out to other transit agencies to identify productivityopportunitiesassuggestedinthisrecommendation.

6. Recommendation: Develop a centralized repository for working contract documentswithin departments, and establish regular Division‐ and Department‐level reporting oncontractstatus.


Managementconcurs thatoursystemofcontractdocumentsandrecordsmanagementshouldbeevaluated toconformwith,andeffectivelysupportperformanceunder, thecontractmanagementmodel.

7a. Recommendation: Develop and report on key contract administration performancemetricstoExecutiveManagementandtheAudit&ReportingCommitteeviatheannualP&CDbudgetscorecard.

Managementconcurs.Detailsregardingspecificmeasuresaretobedetermined.

7b. Recommendation: Utilize performance‐based contracting models to improve vendoraccountability.

Management concurs. Training and “buy‐in” at the department‐level is essential to thisrecommendation. P&CD will take a lead role in education, training and the development ofguidelinesinthisarea.

Seethethree‐phasedActionPlanabove,whichincludesmanagementedits.

October9,2013

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