To provide clarity and perspective, we are commenting on the Authority's response to the audit. The numbers below correspond to the numbers we have placed in the margin of its response.

Although the Authority states that the Business Oversight Committee (BOC) considers benchmarks prior to progressing to procurement or the next phase of project delivery, this committee, which the Authority established in September 2017, has not yet overseen the procurement of a construction contractor. As Figure 6 on page 26 shows, the Authority executed the most recent of its three construction contracts-for Project 4-in 2016. Therefore, any oversight the committee provides regarding key preconstruction activities is still prospective.

①

As we discuss on pages 30 and 31 of the report, the Authority's recently released comprehensive schedule delineates that early work tasks, such as land acquisition, should begin before the design and construction phase. However, the schedule does not establish specific benchmarks the Authority must achieve before procuring a construction contractor. Therefore, to avoid cost overruns and delays from moving to the construction phase too soon, as our recommendation on page 36 specifies, the Authority should establish formal prerequisites for beginning construction and these prerequisites should identify specific benchmarks related to land acquisition, utility agreements and relocations, and agreements with external stakeholders.

②

As we state on page 39, CMSU's oversight of contract management policies and procedures has been weak and inconsistent. We also explain on page 41 that placing oversight responsibility with RDP consultants creates a potential conflict of interest. However, under the Authority's proposed approach, it would not have funding for state employees to staff CMSU until at least July 2020. Given the issues we found and the amount of public funds at stake, we believe the Authority should move faster to secure professional state staff to perform CMSU's crucial oversight duties.

③

We state on page 38 that as of September 2018, the Authority's 56 contract managers were collectively responsible for 204 contracts. Although we recognize the amount of work necessary to hold each contract manager accountable for each of their assigned contracts, we do not believe the State can afford for the Authority to take two years to complete its assessments of contract managers, as its response indicates. Additionally, we encourage the Authority to focus its initial efforts not only on the contracts identified in this audit but also its other largest and highest risk contracts.

④

The Authority's response does not specify whether its methodology for evaluating its PCMs-which we refer to in our report as construction oversight firms (oversight firms)-will include procedures for assessing the sufficiency of the oversight firms' reviews and approvals of invoices for construction contracts. As we state in our recommendation on page 59, such procedures are important to ensure consistency and the effectiveness of the Authority's efforts to monitor the performance of the oversight firms with which it contracts. Therefore, the Authority should include these procedures in its methodology.

⑤

The Authority states that any oversight firm contract amendment requires approval by the BOC. However, we identified concerns with an oversight firm contract amendment that the Authority approved in March 2018. Specifically, as we describe on pages 55 and 56, the Authority's documents assert that the amendment stemmed from it assigning work to the oversight firm that was outside the original contract. However, the contract manager was unable to tell us the amount of funding that went to the oversight firm for this out-of-scope work and acknowledged that he had not documented the oversight firm's adequate performance. Therefore, until the Authority implements our recommendation on page 59 to track any out-of-scope work that oversight firms perform, the Authority, including its BOC, will not know whether the oversight firms' spending rates are reasonable or if amendments are appropriate.

⑥

We appreciate that the Authority is taking steps to match existing sustainability policy objectives with quantitative metrics in its implementation plan. However, our recommendation on page 68 is that the Authority first revise its sustainability policy to more clearly differentiate between construction and operation phases of the system, a process we would expect to generate new policy goals and objectives. At that point, the Authority should reevaluate its implementation plan to ensure that the plan contains appropriate metrics for those new policy objectives.

⑦

Although the Authority asserts that it improved its environmental and sustainability data gathering and analysis system in July 2017, the Authority's sustainability director confirmed during our audit that the Authority was still in the process of collecting and reviewing sustainability data for calendar year 2017 and that the transition to this system was still ongoing. Additionally, the Authority's response describes quality control measures for the new data system, but these measures are not fundamentally different from those that were in place under the previous system. We describe our concerns with the accuracy of the data on page 63.

⑧

The Authority's assertion that it has completed these comparisons since 2015 is inconsistent with the evidence it provided during our audit. During the audit, the Authority's sustainability director confirmed for us that the Authority was beginning the process of comparing actual sustainability impacts to contractor estimates, but that the Authority did not expect to have preliminary findings until the end of 2018. The Authority also provided documentation showing that some comparisons were underway. However, as we state on page 64 of our report, our expert observed that this documentation does not allow the Authority to effectively project whether contractors will meet or exceed their estimates because it does not account for actual construction progress to date. On page 64 we also state that documentation did not include equivalent comparisons related to the environmental impacts from waste or water use. Therefore, we stand by our recommendation on page 69 that the Authority should comprehensively compare the three construction projects' performances to their original baseline estimates on a quarterly basis, and it should begin doing so no later than May 2019.

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