Report 2018-108 Recommendation 9 Responses

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

Recommendation #9 To: High-Speed Rail Authority, California

To prevent the inappropriate use of contractors to perform state functions, the Authority should develop procedures by May 2019 for evaluating whether new and existing administrative duties should be assigned to contractors or to state employees.

1-Year Agency Response

Procedures to determine whether a new or existing position performing administrative duties should be assigned to a consultant/contractor have been established and were implemented. An additional enterprise-wide effort to align Authority staff to ensure that form fits function is currently in progress. The evaluation utilizes objective criteria on how to best achieve proper alignment of state and consultant staff to functionality, as well as considering the right balance of resources. However, this additional effort does not affect the Authority's implementation of this recommendation.

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

In addition to the changes it made to its CMSU staff as part of implementing recommendation #7, the Authority provided documentation that it has replaced significant portions of its finance consultants with state staff. Although the Authority confirmed it did not use its new policies and procedures as part of this process, it confirmed that it will do so for all administrative duties going forward.

6-Month Agency Response

The Authority has created procedures, as well as a new form to be completed, for evaluating whether administrative duties should be assigned to a consultant/contractor or state employee. The procedure includes instructions for contract managers to provide adequate justification for utilizing consultants/contractors.

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

The Authority has implemented procedures requiring that contract managers of professional service contracts work with procurement staff to ensure compliance with state law prior to awarding a new contract. The procedures also set forth actions that contract managers must take in order to modify existing contractors' duties. The Authority notes in its response to recommendation #7 that the CEO has directed a review to determine if existing consultants are temporary, of a particularly urgent nature, or of such a highly-skilled or technical nature not available in civil service. We confirmed with the authority that this review is ongoing.

60-Day Agency Response

The Authority's Administration Office has drafted procedures for evaluating whether new or existing administrative duties should be assigned to contractors or to state employees based on Government Code 19130. The draft procedures are being circulated for review and comment.

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

The Authority provided draft language it intends to include in its hiring manual which requires that contract managers of personal services contracts must ensure compliance with state law regarding the use of state employees. It also provided a draft form that contract managers must complete to certify that the use of outside consultants is appropriate. Going forward, as part of determining whether the Authority has fully implemented this recommendation, we will be looking for additional assurance that the drafted language is suitably broad to cover all relevant contracted duties, as well as that the Authority has instituted an effective process for reviewing contract managers' determinations.

All Recommendations in 2018-108

Agency responses received are posted verbatim.