In response to its 2015 and 2016 internal audits, the Authority established a contract administration organization in 2016, which included the Contract Management Support Unit (CMSU). The Authority tasked CMSU with developing revised and improved policies and procedures, governance structures, and training and other resources applicable to all contract management areas. In April 2017, the Authority approved nine new policies and procedures related to contract management. These policies cover key areas for contract management, including invoicing and payment, performance monitoring and reporting, and contract compliance. Additionally, the procedures outline processes to ensure that contract managers effectively manage contract documents, deliverables, risks, changes, and disputes. When we compared the 2017 policies with requirements in California's State Contracting Manual, we found that the Authority's policies were consistent with those requirements in areas related to controlling costs, such as prompt invoice review and comprehensive monitoring of contractor work products, referred to as deliverables.
| We also found that the 2017 policies improved upon the Authority's previous policies by specifying required contract management processes and the documentation of those processes. That is, although both the 2014 contract manager handbook and the 2017 policies are broadly consistent with the State Contracting Manual, the 2017 policies emphasize specific process steps that contract managers must perform, require the use of tracking logs and other documents, establish a standardized file system for maintaining contract management documentation, and create a process for transferring files to new contract managers to preserve the consistency of contract oversight. Table 1 on the following page lists the documentation that the policies require contract managers to maintain to demonstrate how they are monitoring each contract. In these ways, the policies recognize both the deficiencies uncovered by the Authority's internal audits and the need to document processes to facilitate and demonstrate compliance. | |
| CMSU's Oversight Responsibilities • Review and report on contract managers' compliance. • Communicate noncompliance to appropriate supervisors. • Follow up on concerns until completely resolved. Source: The Authority's contract management policies and procedures. |
Although the Authority as a whole is responsible for writing contracts in a manner that safeguards the State's interests, its contract management policies identify contract managers as the personnel responsible for overseeing those contracts once executed. Further, the Authority's 2017 policies and procedures assign CMSU oversight responsibility to help ensure contract managers' compliance with policies, as the text box describes. The Authority also requires CMSU to collect feedback to help develop lessons learned and identify areas for continued improvement. In Chapter 2, we evaluate the Authority's implementation of its new contract management policies and procedures.
Table 1
The Authority's Procedures Require Contract Managers to Keep Clear Documentation Related to Ensuring Contract Value and Controlling Costs
| CONTRACT MANAGEMENT AREA | REQUIRED DOCUMENTATION | TO ENSURE CONTRACT VALUE, CONTRACT MANAGERS MUST... |
| Invoices | Invoice tracking log | Use this log to track the contract's invoices, expenditures, budget, and forecast. This process is essential to managing the contract and ensuring the contractor does not incur costs over the contract's limit. |
| Invoice approval checklist | Complete an approval checklist to verify that each invoice submitted for payment is true, correct, and in accordance with law for all contracts with value greater than $5 million. | |
| Dispute tracking log | Use this log to track and document invoice dispute information and the status of the resolution process. | |
| Deliverables | Deliverables tracking log | Use this log to document the contract deliverables' status and the determination of whether the deliverables are timely and meet the quality terms of the contract. |
| Deliverable acceptance notice | Use this notice to attest that a deliverable meets the acceptance criteria and to indicate acceptance of the final deliverable. | |
| Recovery plan | Request this plan from the contractor if a contract deliverable has fallen behind schedule, does not meet contract requirements or documented acceptance criteria, or may require repeated work. | |
| Performance and Amendments | Risk register | Use this register to identify risks, as well as strategies to accomplish contract objectives in the face of those risks. |
| Change tracking log | Assess any potential amendments to a contract for merit, and use this log to document the outcome of this assessment, the potential amendment's impact on the project's schedule and proposed cost, and a description of the issue or need for change. | |
| Contract compliance assessment | Conduct assessments of contract requirements, including-at a minimum- insurance, small business utilization, deliverables, invoicing, schedule, change orders, and subcontracts. |
Source: The Authority's contract management policies and procedures.