Dana Point Harbor Revitalization - 15 Years of Planning: What Has Been Learned*

The original and current contract for the project management company has been extended five times since March 2003 without an audit clause. Agrees with the finding. The agreement includes language that, while not specifically identified as an "audit clause", requires the keeping of accurate records that "will be available for inspection by COUNTY, or by any other appropriate governmental agency, at reasonable times, for a period of four years after final payment under this agreement." In fact, this contract has been subject to audits by both the Orange County Auditor-Controller (Contract Administration and Contract Payments, December 31, 2008) and Internal Auditor (No. 2013-12). The County Procurement Office has since updated the language from this 2003 contract with new language for standard terms and conditions for County contracts related to "Audits/Inspections" to be included in all future contracts. The new language is as follows: Contractor agrees to permit the County's Auditor-Controller or the Auditor-Controller's authorized representative (including auditors from a private auditing firm hired by the County) access during normal working hours to all books, accounts, records, reports, files, financial records, supporting documentation, including payroll and accounts payable/receivable records, and other papers or property of contractor for the purpose of auditing or inspecting any aspect of performance under this contract. The inspection and/or audit will be confined to those matters connected with the performance of the contract including, but not limited to, the costs of administering the contract. The County will provide reasonable notice of such an audit or inspection. The County reserves the right to audit and verify the contractor's records before final payment is made. Contractor agrees to maintain such records for possible audit for a minimum of three years after final payment, unless a longer period of records retention is stipulated under this contract or by law. Contractor agrees to allow interviews of any employees or others who might reasonably have information related to such records. Further, COUNTY OF ORANGE Responses to Findings and Recommendations 2013-14 Grand Jury Report entitled "Dana Point Harbor Revitalization – 15 Years of Planning: What Has Been Learned?" contractor agrees to include a similar right to the County to audit records and interview staff of any subcontractor related to performance of this contract. Should the contractor cease to exist as a legal entity, the contractor's records pertaining to this agreement shall be forwarded to the surviving entity in a merger or acquisition or, in the event of liquidation, to the County's project manager. The County retains the right to audit any contract in which it enters with a private corporation, including audits of financial management (Auditor-Controller, Internal Audit) or performance (Performance Audit).

The references for the final chosen three applicants responding to the original request for proposal, (RFP) were not verified. Disagrees wholly with the finding. The October 2002 A-E Selection – Request for Proposal (RFP) Interview & Written Evaluation Criteria forms were made available to the Grand Jury. The final three applicants (Project Dimensions, Inc., DMJMH+N and Gafcon, Inc.) were each evaluated by five County evaluators. Evaluation Criteria "II" in the written proposal evaluation was "Key Personnel and References". Each of the three final applicants were scored based on their "References". (refer to AIT #77 dated December 10, 2002).

When the evaluations were done of the three competitors, the selected company came in last on the weighted written portion, but first on the orals. The proposals included references on past performances however; the evaluators did not evaluate the past performance submitted with the proposal. The original references by the selected project management company could not be produced. Disagrees partially with the finding. Agrees that the selected firm ranked first on oral and last on written. However, when this RFP was analyzed in 2003, the County's criteria for selection was to use the project management company with the highest score overall. The selected company, Project Dimensions, Inc. came in first place with an overall score of 2,166 (second place had a total score of 2,018, third place had a total score of 2,010). With regard to the references, please refer to response for F.2. COUNTY OF ORANGE Responses to Findings and Recommendations 2013-14 Grand Jury Report entitled "Dana Point Harbor Revitalization – 15 Years of Planning: What Has Been Learned?"

The original responses to the initial Request For Proposals (RFP), have been unable to be found by Dana Point Harbor or the County Executive Office staff. Agrees with the finding. This finding is of questionable relevance as the terms scope of work contained within the contract govern its implementation. The Grand jury was provided with copies of the 2002 DPH Project Management Evaluation Results, which clearly show PDI with the highest ranking score overall among the 5 County evaluators. The contract which was executed in 2003 is the legally binding document by which the County and contractor must abide.

Amendment #5, April, 2013 to the original contract for the project management company was incorrectly labeled and submitted to the Board of Supervisor for ratification as a 'Sole Source' contract although this was subsequently corrected. Agrees with the finding. However, this finding is not relevant. Although the amendment was originally submitted as a sole source agreement, this was corrected during internal pre-review prior to Board consideration. A "Sole Source" contract was not processed/approved for project management.

The Contract Policy Manual does not contain well written examples of "sole source" justification. Disagrees partially with the finding. The purpose of the Contract Policy Manual is to be a policy manual and not a procedure manual, and therefore it doesn't contain sample forms as part of the document. However, the County has made modifications to the Contract Policy Manual, Section 4.4 "Sole Source and Proprietary Requests" to revise the policy regarding sole source contracts and additional review procedures have been implemented to ensure compliance. Also, the sole source justification form available to County staff online does provide direction and guidance as to how to complete the form. COUNTY OF ORANGE Responses to Findings and Recommendations 2013-14 Grand Jury Report entitled "Dana Point Harbor Revitalization – 15 Years of Planning: What Has Been Learned?"

Historical invoices submitted by the project management company lack specificity. Although monitoring of the invoices have improved with the oversight of the County Internal Auditor, the Grand Jury found that there remains a lack of information on the submitted invoices to determine the specified task, the portion of the task completed, or the anticipated date of completion. The ability to follow the assigned task from beginning to completion with the financial allotment/award is not easily determined. Disagrees wholly with the finding. Invoicing for this project has been ongoing for 12 years. During this time, the agreement with the Project Management firm has changed based on direction from the County at any given point in time through the Board of Supervisors. Originally, the agreement was a fixed fee agreement billed in proportion to the work accomplished. As the County's needs changed, in 2006 the agreement was modified to a flat monthly fee, plus time and materials. Now it is strictly a time and materials agreement. Invoicing format has been modified over the years based on the type of agreement structure and based on invoicing requirements and project needs set by the County at the time. The County Internal Audit Department (IA) performed an audit on Contract Administration and Contract Payments, their Objective #2 specifically looked at invoices for PDI and determined only control findings were recommended to properly date stamp and adhere to the allowable process time for payment. No other recommendations were made regarding the PDI invoices (refer to Internal Audit No. 2820 dated September 16, 2009). The Department was then directed in 2013 to obtain greater detail on deliverables and time charged on each invoice following review from the IA. Each monthly invoice is now submitted to the IA to verify all pertinent information is included prior to approval for payments, the Department and IA feel all necessary detail is provided. These invoices are also reviewed in conjunction with the weekly team meeting agenda material, and further reviewed by the Auditor Controller in conjunction with the existing contract prior to payment.

Standardized minutes of the weekly meetings held with Harbor Management, the project management company, various vendors, and lease holders associated within the Harbor, are not documented. Disagrees wholly with the finding. Regular team meetings are held by OC Dana Point Harbor with the Dana Point Shipyard (quarterly), the Harbor Operators (bi-weekly), as well as the project management company and design/engineering consultants (weekly). The proceedings of these meetings are documented on a consistent basis. Meeting agendas are prepared. Topics of discussion include permitting, design, engineering and other issues and items pertinent to the COUNTY OF ORANGE Responses to Findings and Recommendations 2013-14 Grand Jury Report entitled "Dana Point Harbor Revitalization – 15 Years of Planning: What Has Been Learned?" revitalization project including progress, status of work products, updated schedules, information and coordination on action items are discussed and assigned, and follow up on previous action items is done. All of this information from each meeting is added to the agenda for the next meeting and the process is repeated for each meeting. Although not technically titled "minutes", this documentation process has been an effective tool in managing this complex project and creating documentation of the meetings and what is discussed. All historical agendas and any attachments are kept on file in the Department. This same method is used for other standard meetings with County contractors, including bi- weekly meetings with operators for Harbor Operational items within their respective operating areas. Additionally, a spreadsheet with milestones and related deadlines are maintained for the Dana Point Shipyard and used as the agenda during the quarterly meetings. All of these documents are also kept on file by the Department.

There are two managerial marine companies in the Harbor which duplicate services for boaters and operate under two separate County agreements; the East Marian and the West Marina. Agrees with the finding.

Oversight for the Revitalization Project is lacking especially in the areas of: a) no audit clause in the original contract b) invoice non specificity (document does not track deliverables) c) sole source error to the original contract Disagrees wholly with the finding. Oversight is not lacking in any of the areas referenced as has been previously noted in F1, F5, F7 respectively. COUNTY OF ORANGE Responses to Findings and Recommendations 2013-14 Grand Jury Report entitled "Dana Point Harbor Revitalization – 15 Years of Planning: What Has Been Learned?"