Report 2011-131 Recommendation 16 Responses

Report 2011-131: City of Vernon: Although Reform Is Ongoing, Past Poor Decision Making Threatens Its Financial Stability (Release Date: June 2012)

Recommendation #16 To: Vernon, City of

To better control contract expenditures and ensure that it receives the best value for the services it purchases, the city should require that all contracts contain a well-defined scope of work and deliverables that a sufficiently detailed invoice can be measured against.

Annual Follow-Up Agency Response From October 2016

The City Attorney's Office worked jointly with City Departments to refine contract templates in order to ensure that the City receives the best value for the service that the City intends to purchase. The City's standard form professional services agreement requires at Section 2.0 ("Scope of Services"), that contractors provide deliverables as articulated in both the City's RFP and the contractor's proposal —both of which are attached to the contract and incorporated by reference. Additionally, within Section 5.0 ("Compensation and Fees"), the contract requires that the contractor specify each component of their service costs in a separate schedule (attached to the contract and incorporated by reference). All contract templates are consistent with the City's Purchasing Ordinance, Purchasing Manual, Budget Policies and Procedures Manual, and Accounts Payable Invoice and Check Processing Procedures.

In addition, contract management guidelines have been developed for the purpose of providing a tool to aid in the preparation of contracts, requests for proposals, bid notices, etc. In this effort, the City further focuses on the presentation of a well-defined scope of work for a given project in order to increase transparency and eliminate ambiguity.

In conjunction, guidelines and templates will be utilized by staff to better manage contract expenditures citywide.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Annual Follow-Up Agency Response From October 2015

The City Council approved Resolution 2015-10 on March 3, 2015 to address that all contracts contain a well-defined scope of work and deliverables to ensure that a sufficiently detailed invoice can be measured against.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

The city states that the City Council approved Resolution 2015-10 on March 3, 2015 to address that all contracts contain a well-defined scope of work and deliverables to ensure that a sufficiently detailed invoice can be measured against. Resolution 2015-10 includes templates which show the form the city will use for the Notice Inviting Bids, Bid Form and Project Specifications, Instructions to Bidders and Specifications and Contract. However, these templates do not describe to contract managers (or others preparing the contracts) specifically what information must be included to ensure that a contract has a well-defined scope of work. It is unclear how the city will ensure that all of its contracts contain a well-defined scope of work and deliverables that a sufficiently detailed invoice can be measured against.

Annual Follow-Up Agency Response From July 2014

The Finance Department and City Attorneys Office are currently developing scope of work guidelines for each type of contract that a sufficiently detailed invoice can be measured against. The guidelines will be used when preparing contracts, requests for proposals, bid notices, etc. and will be consistent with the Citys Purchasing Ordinance, Purchasing Manual, Budget Policies and Procedures Manual, and Accounts Payable Invoice and Check Processing Procedures. The City is currently in the process of hiring a new City Attorney and expects said person to be onboard by late July or early August 2014. The guidelines will be finalized with the new City Attorney shortly thereafter and hopefully no later than October 1, 2014.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

1-Year Agency Response

On February 25, 2013, the City Council adopted Resolution No. 2013-23, approving the general forms of personal service contract, types of insurance and indemnity, purchase order contracts, requests for proposals, and attorney services contracts. All of these forms of document contain the recommended good governance provisions, including well-defined scopes of work and deliverables. Requests for Proposals are required to contain well-defined scopes of work and deliverables prior to City Attorney approval as to form and City Administrator approval to issue. The appropriate form of contract is attached as an exhibit to the RFP and, ultimately, the RFP and selected proposal are attached in their entirety as exhibits to the final contract. Since the adoption of the Competitive Bidding and Purchasing Ordinance (Ordinance No. 1200) in December 2013, ten RFPs have been issued. On June 25, 2013, the Finance Department issued the City of Vernon Purchasing Manual to all City departments, as adopted by the City Administrator pursuant to the City's Competitive Bidding and Purchasing Ordinance (Ordinance No. 1200). The Purchasing Manual was prepared by the Finance Department, with significant input from the City Attorney's Office and all City departments. The Purchasing Manual sets forth all of the requirements of the Purchasing Ordinance as they apply in a practical manner to the day to day operation of the purchasing system. It requires invoices to be measured against the scope of work and deliverables in the respective contract.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

The city's response indicates that it adopted a resolution which approved the general forms for its different types of contracts and indicated that the resolution included recommended good governance provisions, including well-defined scopes of work and deliverables. However, the contract templates do not describe to contract managers (or other preparing the contracts) specifically what information must be included to ensure that a contract has a well-defined scope of work and deliverables that a sufficiently detailed invoice can be measured against. Based on the response, it is unclear how the city will ensure that all of its contracts contain a well-defined scope of work.

6-Month Agency Response

In December 2012 the city council adopted a competitive bidding and purchasing ordinance. By the end of June 2013, the city expects to adopt a purchasing manual, which will set forth requirements of the ordinance for the day-to-day operations of the purchasing system. The city expects its purchasing manual to require all RFPs to be reviewed by the purchasing authority and city attorney's office prior to approval by the city administrator or city council, depending on dollar amount, for the purpose of ensuring adequate monitoring and auditing tools, such as a well-defined scope of work and defined deliverables.

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

60-Day Agency Response

The city states that a top priority for its recently appointed city attorney will be to develop a comprehensive contracting policy resolution for city council approval, but it did not give a time frame for completion. (See 2013-406, p. 193)

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

All Recommendations in 2011-131

Agency responses received after June 2013 are posted verbatim.