[Letter from Brian P.Kelly]
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| October 22, 2018 | |
| BOARD MEMBERS
Daniel Curtin Bonnie Lowenthal Nancy Miller Michael Rossi Lynn Schenk
CHIEF EXECUTIVE OFFICER
EDMUND G. BROWN JR.
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Brian Annis, Secretary |
| Dear Secretary Annis: The California High-Speed Rail Authority (Authority) appreciates the opportunity to respond to the California State Auditor (CSA) draft audit report issued on October 15, 2018. The CSA conducted this audit at the request of the Joint Legislative Audit Committee. The audit's scope addressed the efficiency and efficacy of the policies and practices employed by the Authority. We concur with and will work to implement the CSA's recommendations as an integral part of the Authority's commitment to excellence and continuous improvement. We are pleased to report that we have begun implementing these and other corrective actions to remedy the issues identified. The Authority is making progress on delivering the California high-speed rail system. The Authority's challenge has been to evolve its organization and improve its program management processes, while concurrently delivering this complex mega-program. We are working to meet this challenge through a continuous improvement process by which we methodically and regularly identify and apply lessons learned. Through this ongoing process, we are taking systematic steps to expedite the Authority's transition to a more rigorous program management and delivery organization. This evolution included establishing new governance structures in mid-2017 -- that we further strengthened in 2018 -- to more effectively manage the program through highly structured configuration management and change processes. To advance and expedite this organizational transition, the Board of Directors recruited new leadership in 2017. The Board appointed me as the Authority's Chief Executive Officer and my tenure began in February 2018. I was joined immediately thereafter by two newly appointed senior executives I selected to support me in leading this organization - a new Chief Operating Officer and a Chief Deputy Director. Those individuals brought specific skill sets in construction and program delivery and in administrative management. Together, we and the rest of the senior executive team take the audit's recommendations seriously. My senior executive team has reviewed the audit and is working with staff to address the CSA's recommendations. This will include conducting root cause analyses and implementing additional corrective actions beyond the audit's recommendations, if necessary. We regard this as an opportunity to further solidify the systemic improvements that the Authority has continued to establish and that we have strengthened over the last year. Also, the CSA's audit coincides with the Authority's development of three key foundational governance documents that are essential to our ongoing process of continuous improvement. |
First, in May 2018, the Board of Directors adopted the 2018 Business Plan, which lays out the Authority's implementation strategy for delivering California high-speed rail. Second, in June, the Board adopted our 2018 Program Baseline, which is an essential management document that outlines the scope, schedule and budget for the Authority Program's early delivery objectives. Third, in October 2018 we finalized our Project Management Plan (PMP), which clarifies our integrated organizational framework and presents a governance structure stressing program management and delivery.
As detailed below, we are actively addressing the audit's recommendations through implementation and other remedial steps. As it has done in the past, the Authority will move swiftly to fully implement the recommendations of the State Auditor that bear on the efficacy of program delivery. We hope and trust that our rapid implementation of these recommendations will bolster confidence in the Authority's commitment to active management and continuous improvement of this most important program.
The CSA recommendations and the Authority's responses (in bold) are as follows:
- Chapter 1: The Authority's Decision to Begin Construction Before Completing Proper Planning Led to Cost Overruns and Delays
- Chapter 2: The Authority Has Not Successfully Enforced the Policies It Implemented to Address Ongoing Deficiencies With Its Contract Management
- Chapter 3: The Authority Can Improve the Quality and Transparency of Its Monitoring and Reporting for Key Goals
- [Signature Page]