Sacramento Area Sewer District Serving You 24/7 August 23, 2012 Honorable Laurie Earle, Presiding Judge Sacramento*

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The District Ethics Policy should be distributed, read, and signed by every District employee on an annual basis. Reviews of guidelines and principles should be conducted with staff periodically. Each incident of review should be documented, signed by the reviewer, and placed in the employee's personnel file. If not now assigned, the District needs to have an ethics officer assigned to monitor this effort on an ongoing basis. Additionally, the District needs to submit an Annual Ethics Report to the District Board. We agree that the District Ethics Policy should be read and signed by every County employee that works for the District. However, we feel a frequency of every year is unnecessary and a longer interval reflects a better balance between benefits and costs. SASD staff and Sacramento Regional County Sanitation District (SRCSD) staff are both under a common organizational structure, and in total there are over 700 people. Assuming that it takes about an hour per person to administer the distribution, collection, review, filing, and tracking, the costs in staff time could exceed $50,000 each cycle. The District feels that this cost would outweigh the benefit of annual review. We agree that reviews of the Ethics Policy should be conducted periodically and that records of such review should be kept. Therefore, by December 31, 2012, SASD will prepare and implement a procedure that requires all employees to review and sign the Ethics Policy upon entering service with the District, upon any significant change in the Ethics Policy, and no longer than a maximum period of five years. Signed copies will be kept in each employee's file. The procedure will also require the contents of the policy to be reviewed at each event. The review may take the form of a one-on-one conversation between the supervisor and employee, supervisor reviews in group settings, or training coordinated by the District's training office. Records of the reviews / training will be kept in either the employees' personnel files or in the District's Learning Management System software. Honorable Laurie Earle August 23, 2012 We agree that verifying compliance with the review, signing, and training surrounding the Ethics Policy needs to be an assigned responsibility to an individual. The title of the person handling this responsibility is immaterial as long as the function is performed. To that end, by December 31, 2012, the District will make an assignment in writing to a Manager with the responsibility to make sure that that the procedure discussed above is followed. This assignment will include an annual review of compliance with the review, signing, and training requirements. The results of the review will be submitted to the District Engineer. We agree that the Board of Directors has a role in the ethics program, and the most appropriate role is setting the policy and delegating implementation to District staff. In the past, the District Board has approved the contents of the Ethics Policy, and it is intended that it would approve any significant amendments to the policy. However, we do not agree that it is necessary to provide the District Board with an annual ethics report. Such a report would be limited to statistics on how many employees signed the policy and received training which would be relatively meaningless at that level. Furthermore, it is not legally permissible to discuss any personnel and confidential personnel matters in a publically available report to the District Board. It is important to note that a critical aspect of developing and maintaining high ethical standards is diligently reviewing real situations that arise over time and taking corrective action such as discipline when appropriate. To protect the rights of employees in confidential matters, this element of assuring high ethical standards needs to reside within the District's management and supervision chain of command and human resources staff. <b>R.2</b> The District should enact provisions to prohibit the awarding of District contract(s) to any past employee for a period of one year subsequent to their date of separation from the District, eliminating the potential for unfair competition. The District does not agree with this recommendation. In certain circumstances, there are laws in place that limit employees' rights after separating from public service. For example, State law pertaining to retired annuitants prohibits returning to service until after a certain period of time, and limits the number of hours that can be worked in a year. District officials are covered by the provisions of the Political Reform Act and must follow that act in conducting themselves in their capacity as District staff. Similarly, the provisions of Government Code section 1090 apply to District employees, preventing any employee from being financially interested in any contract made by them in their official capacity These state laws sufficiently protect the public from unfair competition or advantage by SASD employees. The District issues many different types of contracts including contracts for construction services, professional services (such as engineers and architects), sewerage maintenance and repair, and acquisition of general goods and services. Each of these types of contracts has their own purchasing laws, regulations, and policies. For example, construction contracts for public works of improvements must be openly advertised for bids and awarded to the lowest responsive responsible bidder. In this case, the low bid gets the work unless the proposal is not responsive or the bidder can be shown to be not responsible. Showing that a bidder is not responsible is a stringent test, and the fact of whether the bidder was a past employee or has a past District employee on their staff would not be relevant to the determination. Another example is contracts for professional services. In this case, the law requires that selection of the person or firm to do the work must be based on 4 3 Honorable Laurie Earle August 23, 2012 qualifications and experience. Once the selection is made the next step is to enter negotiations for price. The simple fact that a proposer is a past employee or the proposer has a past employee on their staff would not be sufficient cause to state that the proposer did not have adequate qualifications and experience. While having past experience with the District may seem like an unfair advantage in competing for work, it is not appropriate to punish that person for their knowledge and ability to perform. It must be recognized that obtaining the best service and price is a core value that must be followed for public agencies to serve the public interest. In summary, the District cannot override contracting laws and regulations to avoid perceptions of favoritism. Rather the District must follow contracting laws in a methodical, consistent, and unprejudiced manner. In many cases these laws were enacted to combat the type of advantages that the Grand Jury is concerned with in this case. <b>R.3</b> The District contracting officer must be more involved in monitoring contract procedures, performance and compliance, particularly for professional services contracts. As stated in the response to finding F.4, it is understood that the recommendation is actually referring to rodding and cleaning work which is defined as sewerage maintenance or repair work, not professional services. The District does not agree with the recommendation. As stated in the response to Finding F4, the District Purchasing Officer is heavily involved in the process of developing and administering contracts for rodding and cleaning work. The District believes that additional involvement by the Purchasing Officer is not necessary or beneficial. It should be noted that the recommendation is vague and in compiling this response it would have been more helpful to know exactly and specifically what problems and objectives are in need of correction by "more involvement." The District is certainly open to improving its contracting processes. However, increased involvement comes with increased costs to the District and its ratepayers, and the District must not spend money without clear value. Again, we appreciate the work of the Grand Jury, and substantially agree with the findings and recommendations. We plan to implement certain recommendations to improve our ability to assure high ethical standards. If you would like to discuss our response, please call me at (916) 875-9101. Sincerely, Stan Dean District Engineer Sacramento Area Sewer District Julie Valverde, Director of Finance, County of Sacramento CC Becky Castenada, Grand Jury Coordinator

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The District contracting officer must be more involved in monitoring contract procedures, performance and compliance, particularly for professional services contracts. As stated in the response to finding F.4, it is understood that the recommendation is actually referring to rodding and cleaning work which is defined as sewerage maintenance or repair work, not professional services. . The District does not agree with the recommendation. As stated in the response to Finding F4, the - District Purchasing Officer is heavily involved in the process of developing and administering . contracts for redding and cleaning work. The District believes that additional involvement by the Purchasing Officer is not necessary or beneficial. It should be noted that the recommendation is vague and in compiling this response it would have been more helpful to know exactly and specifically what problems and objectives are in need of correction by “more involvement.” The District is certainly open to improving its contracting processes. However, increased involvement comes with increased costs to the District and its ratepayers, and the District must not spend money without clear value. Again, we appreciate the work of the Grand Jury, and substantially agree with the findings and recommendations. We plan to implement certain recommendations to improve our ability to assure high ethical standards. If you would like to discuss our response, please call me at (916) 875-9101. Sincerely, AZ (oae2., Stan Dean District Engineer Sacramento Area Sewer District cc Julie Valverde, Director of Finance, County of Sacramento Becky Castenada, Grand Jury Coordinator