RFP No. PS51671 PERFORMANCE REVIEW OF COUNTY TRANSIT OPERATORS

EXHIBIT A - SCOPE OF SERVICES as of March 8, 2018

PART 1 - TRIENNIAL PERFORMANCE REVIEW OF THE LOS ANGELES COUNTY TRANSIT OPERATORS FOR THE PERIOD JULY 1, 2015 THROUGH JUNE 30, 2018

The Los Angeles County Metropolitan Transportation Authority (Metro) is required by State statute PUC Section 99246 to conduct an independent performance review of the operators receiving Transportation Development Act (TDA) Article 4 funds. This audit is conducted every three years.

The review of services should be conducted for the following operators:

1. Antelope Valley Transit Authority (AVTA) 2. Arcadia Transit 3. City of Redondo Beach – 4. Claremont Dial-A-Ride 5. Commerce Transit 6. Culver CityBus 7. 8. GTrans 9. Los Angeles County Metropolitan Transportation Authority-Operations (LACMTA) 10. La Mirada Transit 11. 12. Los Angeles Department of Transportation (LADOT) 13. 14. Norwalk Transit System 15. Santa Clarita Transit 16. Santa Monica (BBB) 17.

Also included are the Tier 2 operators as follows:

1. City of Burbank 2. City of Glendale 3. City of Los Angeles – Community DASH Services 4.

A performance review must be completed and submitted to the Director of the State Department of Transportation (CALTRANS) in order for Metro to receive state Transportation Development Act (TDA) funds. The FY 2016-2018 review will include the follow-up of the prior recommendations of the audits performed for the Transit Operators for FY 2013-2015. The review of the Transit Operators shall be conducted a) in accordance with the efficiency, economy, and program results portions of the Controller General’s “Standard for Audit of Governmental Organizations Programs, Activities,

RFP No. PS51671 Page 1 of 12 Issued: 03.13.18 and functions, “ and b) in accordance with procedures and steps described in the “Performance Audit Guidebook for Transit Operators and Regional Transportation Planning Entities”. Copies of the handbook are available from the Metro library or on the following website. http://www.dot.ca.gov/hq/MassTrans/ under the “State Grants” tab and then click on the “Trans Development Act (TDA). Then under “items of interest”, click on the “Performance Audit Guidebook”.

1.1 WORK TASKS

The CONTRACTOR shall conduct the following tasks and prepare associated deliverables according to an agreed-upon schedule:

1.2 PROJECT KICKOFF MEETING

The CONTRACTOR(S) shall hold a project kick-off meeting with Metro representatives to introduce their team; review overall performance review objectives and clarify responsibilities; identify primary contact person(s) and initiate data collection. The CONTRACTOR shall submit a list of documents and information required to assess compliance with performance audit requirements and follow-up from previous performance audits.

1.3 FOLLOW-UP ON PRIOR PERFORMANCE AUDIT RECOMMENDATIONS

The CONTRACTOR will make determinations as to whether recommendations which have not been implemented are: a) no longer applicable; b) infeasible; or c) should still be implemented. If a prior audit recommendation has not been implemented but still has merit, the CONTRACTOR shall include the prior audit recommendation in the current audit report. The CONTRACTOR will evaluate recommendations, which have been implemented or are being implemented. For these recommendations, the CONTRACTOR should assess the benefits provided (or likely to be provided) by the implementation of the recommendations. Significant accomplishments in implementing prior recommendations should be recognized.

1.4 INITIAL REVIEW

The initial review of transit operator functions should provide the CONTRACTOR with an understanding of the operators’ characteristics, including a familiarity with the modes of service provided, type of services offered, size of the operator, and the functions performed by the operator.

If an operator offers more than one type of service (e.g. an operator may provide both Fixed Route and Demand Responsive service), the CONTRACTOR shall conduct the performance separately for each type of service.

1.5 REVIEW OF COMPLIANCE REQUIREMENTS

Section 99245 of the PUC requires an annual certified fiscal audit of each claimant of TDA funds, and specifies certification that the funds allocated to the claimant pursuant to the TDA were expended in conformance with applicable laws and rules and regulations.

The audit process shall also include a review to determine if the Transit Operator has:

 Complied with applicable state and federal laws and regulations  Established goals and objectives for its activities and programs

RFP No. PS51671 Page 2 of 12 Issued: 03.13.18  Developed standards to measure agency performance  Achieved desired program results; and,  Conducted its activities and utilized its resources in an efficient and economical manner.

1.5.1 The CONTRACTOR shall gather data for three fiscal years (FY16, FY17, FY18) to report on specific performance measures.

The data collection and review effort should include calculation and interpretation of the following indicators required under the TDA regulation under PUC Section 99246(d).

All indicators are to be calculated utilizing the definitions in PUC Section 99247.

 Operating cost per passenger  Operating cost per vehicle service hour  Passengers per vehicle service hour  Passengers per vehicle service mile  Vehicle service hours per employee

1.5.2 In addition, the CONTRACTOR shall perform the same tasks for:

 Fare box Recovery Ratio

1.5.3 Review Non-Financial Data Collection Practices Used for Transit Performance Measurement (TPM) Reporting Purposes

The Transit Operators are required to meet the requirements of the Transit Performance Measurement (TPM) program applied by Metro to measure operator performance and allocate transit funds. The CONTRACTOR shall review the following non-financial TPM statistics:

 Total vehicle miles  In-service vehicle miles  Total vehicle hours  In-service vehicle hours  Peak vehicles  Unlinked passengers  Linked passengers  Full-time equivalent employees  Passenger revenue

1.5.4 Verify Data Collection Techniques for National Transit Database (NTD) report, TDA, and TPM Reporting Purposes

All the non-financial statistics needed to calculate TDA performance indicators are included within the TPM data. Data Collection review tasks may therefore proceed concurrently for TDA and TPM statistics. A procedural review is required to ensure that the same procedures are utilized for reporting TDA, FTA NTD report, and TPM statistics. The CONTRACTOR shall specifically comment on the accuracy of the various service classifications used by operators.

RFP No. PS51671 Page 3 of 12 Issued: 03.13.18  Data Collection Improvement Recommendations

The CONTRACTOR shall develop recommendations and a basis for adjustment of existing statistics, where appropriate. Recommendations shall address controls, accuracy, documentation, internal consistency, and procedural improvements. Where material differences exist between the CONTRACTOR's verification values and reported values, adjustments to existing statistics should be recommended.

 TPM Data Compilation and Reporting Review

The CONTRACTOR shall evaluate the procedures for annualizing data utilized in TPM reporting. This evaluation shall include an examination of the documentation (audit trail) of the annualized figures; the consistency of data items reported for TPM, TDA, and NTD reports; and the accuracy of the data with respect to service classifications.

 Data Compilation and Reporting Improvement Recommendations

The CONTRACTOR shall make specific recommendations based on findings from the previous task. These recommendations should identify points in the document flow where new procedures shall be implemented. Source documents should be annotated to provide an audit trail.

 Collect Non-Financial Statistics

The CONTRACTOR shall collect non-financial statistics for calculating TDA and TPM performance indicators for fiscal years 2016, 2017 and 2018.

 Calculate TDA-Required Performance Indicators

The CONTRACTOR shall calculate TDA-required performance indicators in a matrix format. These indicators are listed in PARA.1.5.1 above

 Evaluate Performance Indicators

The CONTRACTOR, after reviewing the performance indicators, shall identify declines in performance, highlight areas for further investigation, and make recommendations to improve the efficiency and effectiveness of the transit operator. The CONTRACTOR shall pay special attention to transit operators whose costs are high, highlight reasons and recommend corrective actions.

1.6 DETAILED REVIEW OF TRANSIT OPERATOR FUNCTIONS

The CONTRACTOR shall be responsible for reviewing the various functions of Transit Operators. Since the functions of each operator vary, not all functions will apply to all operators. Transit Operator functions will most commonly consists of:

1.6.1 General Management and Organization; 1.6.2 Service Planning; 1.6.3 Scheduling, Dispatch and Operations; 1.6.4 Personnel Management and Training;

RFP No. PS51671 Page 4 of 12 Issued: 03.13.18 1.6.5 Administration & Budget; 1.6.6 Marketing and Public Information; and 1.6.7 Maintenance

The CONTRACTOR shall review each functional area, as described in the Performance Audit Guidebook, pages 51 to 78. The CONTRACTOR shall highlight areas where improvements could be made by implementing alternative procedures.

1.7 REVIEW THE GOALS AND OBJECTIVES OF EACH OPERATOR

The steps to review each operator's goals and objectives include:

1.7.1 Interview senior management to determine the extent to which performance standards are used as a tool for control. 1.7.2 Evaluate performance and document factors, which have or have not favorably impacted achievement of standards. 1.7.3 Review the extent to which goals, objectives, and performance indicators are integrated with SRTP's and budgets and updated to reflect operating conditions

1.8 PREPARE RECOMMENDATIONS & COST EVALUATION METHODOLOGY

1.8.1 The CONTRACTOR shall review the Operator's internal financial; and administrative controls and determine the following: 1.8.2 Whether there is clear responsibility for developing and implementing controls of administrative costs, maintenance practices, maintenance costs, security costs, and accident prevention methods.

1.9 CALCULATE AND DOCUMENT COST SAVINGS

1.9.1 The CONTRACTOR, where feasible, shall quantify the estimated cost savings that would be achieved by implementing the audit recommendations.

1.10 PREPARATION AND PRESENTATION OF DRAFT AND FINAL REPORT

The CONTRACTOR shall document the study process, findings, conclusions, and recommendations in a comprehensive report to be submitted in draft form to operators and Metro staff for review and comment prior to production of a final report. The CONTRACTOR shall provide management with regular briefings on the progress and interim results of the audit as specified during the Project Kickoff Meeting. The results of data collection efforts and staff contacts will be documented. Specific recommendations for management/performance improvements are to be made based on the findings. The process will consist of the following five steps:

1.10.1 Conduct Exit Interviews with Operators

 Upon completion of the detailed Phase I audit, but before production of the draft Phase I report, the CONTRACTOR shall conduct exit interviews with the operators to review results of the Phase I audits and the preliminary recommendations.

RFP No. PS51671 Page 5 of 12 Issued: 03.13.18 1.10.2 Prepare Phase I Audit Draft Report

 Upon completion of the audit process and the exit interviews, the CONTRACTOR shall prepare a draft report for submission to Metro and the operators for review. The report will contain at a minimum:

- Letter of Transmittal

- Executive Summary

- Audit Findings/Results

- Conclusions and Recommendations

- Review Draft Report with Metro and Operators

After providing adequate time to review the draft report, the CONTRACTOR will schedule an interview with Metro and the operators to discuss the content of the draft report and to elicit constructive suggestions for its improvement.

1.10.3 Present Results to the Metro Policy Committees/Board

 Upon the completion of the changes made in the previous task, the CONTRACTOR will present the Phase I results to the Bus Operations Subcommittee (BOS) and the appropriate Metro Policy Committees.

1.10.4 Issue Final Report and Executive Summary

 CONTRACTOR shall include input received from the Metro committees and operators to produce the final Audit Report and Executive Summary.

1.11 PERIOD OF PERFORMANCE:

Metro anticipates contract award and Notice to Proceed by July 2018. All work must be completed by June 2019.

1.12 ESTIMATED PROPOSED SCHEDULE AND DELIVERABLES:

CUMULATIVE CALENDAR DAYS PROPOSED DATE – MILESTONE AFTER NOTICE TO WORK TO BE PROCEED COMPLETED BY Kickoff Meeting 5 July 10, 2018 Preliminary Findings Report 151 December 7, 2018 Complete Draft Audit 161 December 17, 2018 Conduct Exit Interviews 189 January 14, 2019 w/Transit Operators & Metro Draft Audit Report 200 January 25, 2019 Review Draft Report w/Metro 204 January 29, 2019 Staff

RFP No. PS51671 Page 6 of 12 Issued: 03.13.18 CUMULATIVE CALENDAR DAYS PROPOSED DATE – MILESTONE AFTER NOTICE TO WORK TO BE PROCEED COMPLETED BY Meeting/Interview w/ Operators 213 February 7, 2019 and Metro to review findings Pre-Final Audit Report 217 February 11, 2019 Brief Bus Operations Sub 225+ March 2019 Committee (BOS) Brief Transit Operators’ General 240+ March-April 2019 Managers Meeting Brief Technical Advisory 240+ March-April 2019 Committee(TAC) Brief Metro Board Committee 240+ March-April 2019 (and other Committees as required) Revise Presentation (if required) 240+ March-April 2019 Brief Metro Board 240+ May-June 2019 Submit Final report 240+ May-June 2019

1.13 THE CONSULTANT SHALL DELIVER:

Preliminary Findings 1 hard and 1 electronic copy to Metro Draft Audit Report 1 hard and 1 e-copy to Metro and 1 hard and one e-copy copy to each operator Pre-final Audit Report 5 hard copies and 1 e-copy to Metro and 1 hard and I e-copy to each operator Committee/Board Presentation 20 copies/each Final report 5 hard copies and 1 e-copy to Metro and 2 hard copies and 1 e-copy to each operator

RFP No. PS51671 Page 7 of 12 Issued: 03.13.18 PART 2 - TRIENNIAL PERFORMANCE REVIEW OF THE LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY AS THE REGIONAL PLANNING ENTITY FOR THE PERIOD JULY 1, 2015 THROUGH JUNE 30, 2018

2.0 BACKGROUND

The LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY ("Metro") is required by California State statute (Public Utilities Code (PUC) Section 99246) to conduct an independent performance audit of Metro's activities every three years. As a result of the merger of the Rapid Transit District (SCRTD) and the Los Angeles County Transportation Commission (LACTC) effective April 1, 1993, Metro performs two major functions, which are subject to performance audit requirements. These two functions, regional transportation planning and operation of a mass transit system, were performed by LACTC and SCRTD respectively prior to the merger.

This Contract covers a review of the regional transportation planning function now performed by Metro for the period 7/1/16 to 6/30/18. The transit operator function is covered through the performance audit of the transit operators under a separate scope of work.

A performance review must be completed and submitted to the Director of the State Department of Transportation (CAL TRANS) in order for Metro to receive State Transportation Development Act (TDA) funds. The FY 2016-2018 performance audit will include follow-up of the prior recommendations of the performance audit for Metro for FY 2013 through FY 2015, evaluate, and make recommendations regarding the efficiency, effectiveness, and economy of Metro's program activities. The audit shall be conducted in accordance with the efficiency, economy, and program results portions of the Comptroller General's "Standards for Audit of Governmental Organizations, Programs, Activities, and Functions."

2.1 SCOPE OF SERVICES

The CONTRACTOR shall be required to conduct a performance review of Metro’s regional transportation planning function at both the executive staff and policy level. The review must meet the legislative requirements of AB1246, SB759, and SB1755 and should also provide pertinent information and recommendations to assist in improving the efficiency, economy, and effectiveness of transit program planning and administration of Metro.

The CONTRACTOR shall conduct the following tasks and prepare associated deliverables according to an agreed-upon schedule:

2.2 PROJECT KICK-OFF MEETING

CONTRACTOR(s) shall hold a project kick-off meeting with Metro representatives to introduce the audit team; review overall performance audit objectives and clarify responsibilities; identify primary contact person(s); and initiate data collection.

CONTRACTOR shall submit a list of documents and information required to assess compliance with performance audit requirements and follow-up from previous performance audits.

RFP No. PS51671 Page 8 of 12 Issued: 03.13.18 2.3 FOLLOW-UP ON PRIOR PERFORMANCE AUDIT RECOMMENDATIONS

The CONTRACTOR shall review the FY 2013-2015 performance audits of Metro and assess Metro's implementation of prior performance audit recommendations. The CONTRACTOR shall make determinations as to whether recommendations which have not been implemented are: a) no longer applicable; b) not feasible; or c) still can be implemented. If a prior audit recommendation has not been implemented but still has merit, the CONTRACTOR shall include the prior audit recommendation in the current audit report. The CONTRACTOR shall evaluate recommendations, which have been implemented or are being implemented. For these recommendations, the CONTRACTOR shall review the benefits provided (or likely to be provided) by these actions. Significant accomplishments in implementing prior recommendations should be recognized. Areas for further improvement should be noted.

2.4 DETERMINE COMPLIANCE WITH LEGAL AND REGULATORY REQUIREMENTS

2.4.1 The audit process should include a review to determine if Metro has:

 Complied with applicable state and federal laws and regulations;  Established goals and objectives for its activities and programs;  Developed standards to measure agency performance;  Achieved desired program results; and,  Conducted its activities and utilized its resources in an efficient and economical manner.

CONTRACTOR shall be required to review and determine Metro's compliance with the Transportation Development Act (TDA) and related sections of the Statutes and California Code of Regulations.

The specific code sections for which compliance is to be verified are those specified within the "Performance Audit Guidebook for Transit Operators and Regional Transportation Planning Entities" published by Caltrans. Should the CONTRACTOR identify instances of noncompliance, a finding regarding such instances should be made in the audit report. Such findings should be reported to the Metro's project manager and executive staff to ensure that responses are incorporated into the final draft report.

2.5 REVIEW METRO FUNCTIONS

Functional areas should be reviewed and evaluated by the CONTRACTOR with a goal of identifying existing processes and suggesting methods of improving efficiency and effectiveness in each area. In performing this review, the contractor shall seek input from transit operators and cities, which are affected by these functions. In evaluating the responsibilities noted under this section, CONTRACTOR shall consider Metro's responsibilities pursuant to the reorganization legislation (AB 152). The CONTRACTOR specifically shall review the following functions:

2.5.1 Planning and Programming of Transportation Funds

Metro annually develops the transit funding marks based on operators prepared budgets and their Short Range Transit Plans (SRTPs), specially their L-Tables. Metro reviews the operators' SRTPs and approves projects for inclusion in the Transportation

RFP No. PS51671 Page 9 of 12 Issued: 03.13.18 Improvement Plan (TIP). Funds received from state, federal, and local governments are programmed in the TIP for operating and capital purposes. Metro also facilitates the generation of the Regional Transportation Improvements Program (RTIP). It also actively works to support the inclusion of Los Angeles County projects in the State Transportation Improvement Program (STIP). With this inclusion, it also annually reviews and approves projects proposed for inclusion within the RTIP and STIP.

2.5.2 Transportation Funds Administration

Metro administers the following funding programs (Sections 5307, CMAQ, Transportation Development Act (TDA) Article 3, 4 and 8; State Transit Assistance (STA) funds; Service Metro for Freeway Emergency (SAFE) Funds; and local Proposition A administration funds, Prop A 40%, Prop A 25% local return and Prop A 35% rail funds, Prop C administration funds, Prop C 40% discretionary, Prop C 20% local return, Prop C 25% transit-related highway improvements, Prop C 10% commuter rail, and Prop C 5% security funds.

2.5.3 Rail Construction Program

Metro is responsible for planning and building a rail transit system. This undertaking includes alternative analysis, design, construction, and pre-start-up operations of the project. Ultimately, the following areas will be served by these projects: San Fernando Valley, ; South-Central Los Angeles/Long Beach; South Bay/Harbor; Century Freeway Corridor; and the San Gabriel Valley.

Metro is also part of a Joint Powers Metro (JPA) established to implement and administer an inter-county commuter rail program ("").

2.5.4 Legislative Proponent and Analyses

Metro monitors and analyzes transportation legislation impacting the Los Angeles County region and its transportation programs and projects. Also, Metro actively proposes and supports legislation, which supports greater regional mobility (e.g., Proposition C).

2.5.5 Air Quality Management Plan (AQMP)

In accordance with the recently adopted air quality management plan, Metro is responsible for implementing TCM #1 - Transportation Improvements.

In accordance with this responsibility, Metro is responsible for implementing the transportation projects identified in Metro's Local Transportation Improvement Program (TIP). This strategy replaces all other strategies identified as Metro responsibilities in the 1991 AQMP. Copies of the AQMP are available on the following website: http://www.aqmd.gov/docs/default-source/clean-air-plans/air-quality-management- plans/2016-air-quality-management-plan/final-2016-aqmp/final2016aqmp.pdf

2.5.6 Consolidated Transportation Services Agency (CTSA)

In 1979, the state legislature passed AB 120, the Social Services Transportation Improvement Act, which required each transportation commission to prepare an action

RFP No. PS51671 Page 10 of 12 Issued: 03.13.18 plan for coordination and improvement of social service transportation. In 1988, SB 826 was passed requiring every county transportation commission to prepare and update an action plan for the coordination of social service transportation every four years and progress on the action plan for consolidation of social service transportation services be updated every two years. In April 1990, Metro (then the LACTC) became the county's designated Consolidated Transportation Service Agency (PUC Section 99203, 99204.5, 99233.7), responsible for the social service transportation coordination action plans and as a means of meeting the requirements of the Federal Americans with Disabilities Act. In 2002, AB 2647 was passed, which repealed the action plan and inventory requirements and eliminated the role of Caltrans and the state legislature by providing full responsibility to the local transportation planning agencies or county transportation commissions for preparing and adopting action plans which provided for the consolidation of social service transportation programs within their jurisdictions.

CONTRACTOR shall review any legislatively mandated Metro responsibilities in addition to those noted above.

2.6 MANAGEMENT PERFORMANCE

2.6.1 The CONTRACTOR should address the following questions:

 Is Metro operating effectively and responsibly?  Are available resources effectively organized and allocated to best achieve Metro goals and objectives?

2.6.2 CONTRACTOR shall:

 Review Metro's goal-setting and monitoring process;  Identify and review past significant policy decisions as they relate to the establishment of goals and objectives;  Review Metro's decision-making process and its committee structure;  Review and examine the allocation of Metro's administrative funds to determine whether available resources are adequate, and whether they are allocated in the most effective, efficient, and legislatively correct manner to accomplish Metro's stated goals.

2.7 INTERNAL ADMINISTRATION

2.7.1 CONTRACTOR shall review how budgets are formulated and the steps taken in the process of budget preparation from inception to final approval by Metro. 2.7.2 CONTRACTOR shall review Metro's internal financial and administrative controls; specifically the development and implementation of such controls; and reporting mechanisms to keep management aware of the internal financial and administrative activities. 2.7.3 Contractor shall review the accounting procedures to determine whether fund balances by revenue sources are made available on a regular basis 2.7.4 Review the organization and reporting structure; identify areas for improvement to make the organization more effective; and implement innovative, industry practices to make the staff/management more motivated and accountable.

RFP No. PS51671 Page 11 of 12 Issued: 03.13.18 2.8 DOCUMENTATION OF PERFORMANCE AUDIT RESULTS

2.8.1 The review should present a systematic evaluation of how Metro is performing in all of the above areas. A balanced perspective should be maintained throughout the audit process, wherein achievements as well as potential areas for improvement are highlighted. CONTRACTOR shall develop recommendations with an attachment outlining alternative implementation strategies. 2.8.2 Based on the above analysis and evaluation, CONTRACTOR shall develop a set of specific recommendations on how the efficiency, effectiveness, and economy of Metro should be improved. 2.8.3 Metro shall advise the CONTRACTOR of any pertinent studies, reviews and/or audits conducted during the performance audit. Metro shall provide access to any materials associated with these efforts, with the exception of proprietary information in the possession of, or in development by other Contractors. 2.8.4 The CONTRACTOR shall be required to document the study process, findings, conclusions, and recommendations in a comprehensive report to be submitted in draft form to Executive Management for review and comment prior to production of a final report. The CONTRACTOR shall provide management with regular briefings on the progress and interim results of the audit as specified during the Project Kick-off Meeting. The results of data collection efforts and staff contacts will be documented. Specific recommendations for management/performance improvements are to be made based on the findings. A maximum of five presentations will be made related to this contract, which may include one to the BOS, one to the Board Staff, one to a Board Committee, one to the Board of Directors, and one to the TAC. 2.8.5 CONTRACTOR shall conduct one exit interview with key personnel following delivery of draft reports. In addition, the CONTRACTOR shall provide to the Chief Executive Officer for review and comment all draft and final reports. 2.8.6 CONTRACTOR shall prepare 20 bound copies of both an Executive Summary and a final report. Original reports shall be provided to the Project Manager for internal reproduction.

In addition, CONTRACTOR shall make five presentations to the Metro Board or any Committee thereof, at Metro's or their designee's request, of the audit findings and recommendations.

RFP No. PS51671 Page 12 of 12 Issued: 03.13.18