August 2020 Contract Management – Paratransit Services
AUDIT REPORT – INTERNAL AUDIT
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Contract Management Audit- Paratransit Services Report
To: Councilmember Robin Arredondo-Savage, Chair, Tempe Mayor Kate Gallego, Phoenix Vice Mayor Bill Stipp, Goodyear Councilmember Lauren Tolmachoff, Glendale Councilmember Francisco Heredia, Mesa
The purpose of this report is to communicate the results of the Contact Management review of the Paratransit Services contract. The audit was part of Valley Metro’s Fiscal Year 2019/2020 Internal Audit Plan.
The report includes the following sections: Objective, Scope and Methodology, Background, Areas Reviewed, and Results.
Based on Internal Audit’s review, no material exceptions were noted. Therefore, this report contains no recommendations but provides a summary of the items reviewed.
During this audit, individuals from the Agency Business, Technology & Services Division, particularly the Paratransit Mobility Service area and the Finance Division, particularly the Contracts and Procurement area assisted the auditors. Team members provided process information and documentation for the contract and contract monitoring processes and supplied evidence for testing. Their support is appreciated.
If you have any questions or would like further clarifications, please contact me at 602-322- 4452.
Jennifer Davis, CIA Senior Internal Auditor
Audit report approved by Scott Smith, CEO
______Scott Smith (Aug 31, 2020 20:06 PDT)
Performed by: Vickie Murphy and Jennifer Davis Senior Internal Auditors Distribution Scott Smith, Chief Executive Officer Alexis Tameron-Kinsey, Chief of Staff/Senior Advisor Jim Hillyard, Chief Administrative Officer Paul Hodgins, Chief Financial Officer Michael Minnaugh, General Counsel
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Contract Management Audit- Paratransit Services Report
Objective Determine if the paratransit services contract was awarded in accordance with agency policies and the contract’s performance was monitored and managed.
Scope The review focused on the Transdev Regional Paratransit Services Contract (16013-RPS). Internal Audit reviewed the initial procurement practices leading up to the contract award in early 2017 and all contract amendments through January 2020. The audit period covered May 2016 through January 2020 and reviewed contracting monitoring and financial payments since the inception. Items incurred prior to or carried over from this timeframe and that fall into the scope timeframe or assist with achieving the audit objectives were included.
Methodology To achieve our audit objectives, Internal Audit’s review focused on the following areas: • The Contract award processes to include: Request for Proposal (RFP) and the required contract language, and • Contract monitoring processes to include: Change orders, incentive/disincentive tracking, and pay applications.
The following Valley Metro policy, manuals, and Federal Transit Administration (FTA) regulations were the basis for the review to determine compliance: • RPTA Purchasing / Procurement Policy (v. 06/16/11) • FTA Circular 4220.1F, Revision 3 (v. 02/2011) • FTA Circular 4220.1F, Revision 4 (v. 03/2013) • Joint Internal Procurement Manual (v. 06/25/18) • Joint Internal Procurement Manual (v. 05/08/19)
To achieve the audit objectives, Internal Audit performed the following audit procedures:
• Obtained from Contracts and Procurement, the physical and electronic files for the Transdev Regional Paratransit Services Contract (16013-RPS). Based on the policy in place at the time [RPTA Purchasing / Procurement Policy (v. 06/16/11)], determined:
o 33 applicable steps/requirements for the RFP and contract award process, and o 51 applicable clauses for inclusion in the contract verbiage.
For each item, Audit reviewed the procurement files provided to determine if the step/action/clause was documented.
• Reviewed the physical and electronic files for the Transdev Regional Paratransit Services Contract (16013-RPS) to determine if change orders were:
o Executed in accordance with policy, o Obtained Board of Directors approval, if required, o Approved by appropriate Valley Metro and Transdev staff, and o Maintained supporting documentation.
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Contract Management Audit- Paratransit Services Report
• Interviewed applicable Paratransit Mobility Service staff and documented the contract monitoring process to determine if internal controls over the review of information were evident.
• Obtained from Paratransit Mobility Service staff, the incentive/disincentive tracking spreadsheets from January 2018 through January 2020 and determined if contract monitoring efforts were evident.
• Obtained from Finance, the Pay Applications and adjustment payment records from July 2017 through October 2019 and determined if items were approved, accurate, and supported.
Background Valley Metro’s Fiscal Year 2019/2020 Internal Audit Plan included contract management audits to determine whether the contracts were awarded, monitored, and/or closed according to policy. The paratransit contract was selected for this review. The review will focus on the contract award process and the contract management processes. All public transit agencies that provide fixed-route bus and rail services are required to provide Paratransit services under American with Disabilities Act (ADA). It is a door-to-door transportation option that is provided to people with disabilities that are unable to use the fixed-route bus and rail services. The ADA requires Paratransit services be available within three-quarters of a mile of bus routes and light rail stations. Valley Metro also offers RideChoice, which is a subsidized ride share program to augment the Paratransit program. Since the RideChoice program is not required under ADA, it will not be included in the scope of this audit. Request for Proposal (RFP) and Contract Clauses Prior to 2017, Valley Metro had multiple contracts for paratransit services with different compensation approaches. Given the complexity of two separate contracts and the increase in demand for services, Valley Metro decided to terminate the contracts and issue an RFP to consolidate these services into a single contract. In May 2016, the Board of Directors approved this approach and approved a federally compliant RFP for a base period of five years with five (5) one-year extensions, up to a total of ten years to operate the East Valley, Northwest Valley, and regional paratransit services. An RFP was issued with the following evaluation criteria:
Points Criteria Possible Firm Qualifications and Experience 100 Qualifications/Experience of Assigned Personnel 200 Understanding of the Scope of Work 300 Price 400 Total 1,000
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Contract Management Audit- Paratransit Services Report
Valley Metro received proposals from five firms. Although Transdev did not propose the lowest base price, it was recommended to the Board of Directors for contract for the lowest overall cost and “Best Value” to the agency. In February 2017, Valley Metro requested and received board approval to execute a contract with Transdev for a total of five years not exceed $124.47 million, which included a contract cost of $108.34 million and a contingency of $10.83 million. There was also a projected fuel reimbursement costs for $5.3 million. The contract was signed in April 2017 for services to start July 1, 2017. Based on the policy in place at the time of the RFP process [RPTA Purchasing / Procurement Policy (v. 06/16/11)] and the related FTA regulations, Internal Audit determined the requirements for the RFP process and the applicable contract clauses.
To determine policy and regulation compliance, Internal Audit reviewed documentation for the 33 applicable steps/requirements for the RFP process and the 51 required clauses for the Transdev Regional Paratransit Services Contract (16013-RPS). Some verified items included:
• Method of procurement rationale • Full and open competition • Selection of the contract type • RFP advertised time period • The basis for contractor selection • Determine if multiple vendors replied • The basis for contract price • Board of Director approval
Documents evidencing the completion of the 33 applicable steps/requirements and the inclusion of the 51 clauses for the Transdev Regional Paratransit Services Contract (16013-RPS) were located in the SharePoint files, referenced documents, or within the contract itself. Internal Audit noted no exceptions or opportunities for improvement for the RFP process or the contract language for this contract. Change Orders Internal Audit's review of the physical and electronic files for the Transdev Regional Paratransit Services Contract (16013-RPS) determined four change orders were drafted. Internal Audit noted only three change orders were executed and two of which added subcontractors available for Transdev's use and clarified requirements. The third reflected the changes needed to address the major differences between trip numbers and lengths included in the RFP and the actual demand and distances experienced upon implementation.
In January 2020, a presentation was made to the Regional Transportation Advisory Group (RTAG), providing an analysis of the third change order's net impact. The presentation included the chart below and noted a reduction in total regional paratransit costs (both within and outside the contract) by $744,800 over the five years.
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Contract Management Audit- Paratransit Services Report
Internal Audit reviewed if the change orders required approval from the Board of Directors, were approved by correct Valley Metro and TransDev personnel, and if supporting documents for the changes were maintained. Internal Audit did not evaluate how the change orders were negotiated and priced. The three executed change orders were:
• Change Order #2, executed October 31, 2018 – o A subcontractor was approved, o Driver-training hours were established for the subcontractor, o Requirements for the vehicles were clarified, o Fare payments were set to debit and credit cards and no longer accepted by the drivers, and o Placard identification requirements were changed.
• Change Order #3, executed December 20, 2018 – o Trip charges and subcontractor fees were modified, o Valley Metro will take on the responsibility for purchase, ownership and replacement of vehicles starting in year four, o Valley Metro will pay for a fuel tank installation, o Additional staffing levels would be reimbursed retroactively, o Valley Metro would reimburse Transdev for additional costs associated with the facility retroactively, o Valley Metro would assume cost/ownership of the Trapeze software, o Performance standards were modified, and o Valley Metro would reimburse Transdev in the amount of $2,538,297 for the implementation of the changes above between January 1, 2018 and September 30, 2018.
• Change Order #4, executed May 6, 2019 – o Approved the use of MO MedTrans as a subcontractor for a trial period, o Establish training requirements for the subcontractor, o Established vehicle requirements for the subcontractor, and o Provided for the use of a windshield sticker rather than a placard.
Per Internal Audit's review, all executed change orders were signed correctly, and supporting documentation was maintained. Board of Directors' approval was not required for the change orders as they did not increase the overall contract authority. Internal Audit noted no exceptions or opportunities for improvement for the change order process reviewed for this contract. Contract Monitoring Process and Incentive/Disincentive Tracking Internal Audit interviewed applicable staff, reviewed supporting documentation, and documented the contract monitoring processes followed for the Transdev Regional Paratransit Services Contract (16013-RPS). Staff detailed their process, noting they reviewed the daily Transdev reports of stats and activity breakdown and how items were investigated if warranted. At the end of each month, Valley Metro was sent a monthly roll-up of this information which was used to determine the incentives and disincentives. Additionally, staff visited the facilities 1-2 times per month, attending Transdev safety meetings and customer support de-briefs.
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Contract Management Audit- Paratransit Services Report
Internal Audit reviewed 25 monthly incentive tracking logs from January 2018 through January 2020. Transdev earned incentives and disincentives based on the monthly review of 13 performance metrics. Below is a summary of the incentives and disincentives for the months reviewed and a breakdown by the performance metrics.
Incentive/Disincentive Tracking Summary Time Frame Revenues Incentives % of Revenue Disincentives % of Revenue Net 01/2018-06/2018 $ 8,006,685 $ 80,067 1.00% $ (249,560) (3.12%) $ (169,493) 07/2018-06/2019 $ 19,024,564 $ 190,246 1.00% $ (334,987) (1.76%) $ (144,741) 07/2019-01/2020 $ 12,593,595 $ 125,936 1.00% $ (110,531) (0.88%) $ 15,404 Totals $ 39,624,844 $ 396,249 1.00% $ (695,078) (1.75%) $ (298,830)
Incentive/Disincentive Tracking Breakdown Incentive / (Disincentive) Dollars Metric 01/2018- 07/2018- 07/2019- 06/2018 06/2019 01/2020 (6 months) (12 months) (7 months) 1 On-Time Performance for Pick-ups $ (25,673) $ (57,814) $ (44,481) 2 On-Time Performance for Drop-offs $ (25,673) $ (55,071) $ (27,762) 3 Accident Frequency $ (46,061) $ (92,237) $ 24,487 4 Customer Service/Complaints $ (80,067) $ (4,690) $ 1,143 5 Timely Response to Complaints $ (25,250) $ (12,350) $ - 6 Roadside Service Calls $ 80,067 $ 190,246 $ 125,936 7 Timely Preventive Maint. $ - $ - $ - 8 Adherence to Vehicle & Driver Standards $ - $ - $ - 9 Excessive Trip Lengths $ (40,033) $ (95,123) $ (62,968) 10 Missed Trips $ (6,203) $ (17,102) $ - 11 Timely Data/ Reporting $ (600) $ (600) $ (950) 12 ADA Trip Denials $ - $ - $ - 13 Major System Failures $ - $ - $ - Totals $ (169,493) $ (144,741) $ 15,404
Internal Audit noted that incentives were consistently earned for Transdev’s efforts to minimize Roadside Service Calls and that progressively, less disincentives were charged for the number of customer service/complaints.
Contract monitoring efforts and incentive/disincentive tracking for the 13-performance metrics were evident for the 25 months reviewed. Overall, Internal Audit determined internal controls were established over the review of information, to include tracking of performance incentives/ disincentives and noted no exceptions or opportunities for improvement for the contract monitoring process reviewed.
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Contract Management Audit- Paratransit Services Report
Contract Pay Applications (Pay Apps) Internal Audit obtained from Finance the payment records for the Transdev Regional Paratransit Services Contract (16013-RPS) from July 2017 through January 2020. It was determined 28 pay applications and three adjustment payments, totaling $45,909,517, were posted during the audit scope. Below is breakdown of charges as posted to the general ledger.
Northwest Mobility East Valley Regional Time Frame Valley Service Fuel Costs Totals Paratransit Dial A Ride Paratransit Center 07/2017-06/2018 $ 7,837,232 $ 2,332,368 $ 5,587,022 $ 275,313 $ - $16,031,934 07/2018-06/2019 $ 10,391,083 $ 3,142,859 $ 8,582,226 $ 419,093 $ - $22,535,262 07/2019-10/2019* $ - $ - $ 6,724,077 $ 143,453 $ 474,791 $ 7,342,321 Totals $ 18,228,315 $ 5,475,227 $ 20,893,325 $ 837,859 $ 474,791 $45,909,517 *Beginning Fiscal Year 2019, the general ledger postings for the East Valley and Northwest Valley Paratransit charges were not separated out but included in the Regional Dial A Ride figures.
Internal Audit reviewed the documentation for approvals, accuracy, and support. Each payment required at least four signatures to include: the Accessible Transit Services Manager, the Chief Operating Officer, a Contracts and Procurement review, and a Finance review from the Chief Financial Officer or designee. All required signatures were located on the documents. However, audit noted dates were not indicated on a total of seven signatures (all prior to December 2018). The invoices and supporting documents were reviewed to ensure the amounts were supported and accurate. Audit noted a few clerical errors that totaled under $400 for the audit scope. Internal Audit determined the date and clerical errors did not represent any material risks. Audit Findings and Recommendations Although some errors were noted, none presented any measurable risk. Therefore, Internal Audit offers no noted exceptions, opportunities for improvement, or recommendations for this review.
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Contract Management - Paratransit Services Audit- August 2020 Final Audit Report 2020-09-01
Created: 2020-08-28
By: Gina Frackiewicz ([email protected])
Status: Signed
Transaction ID: CBJCHBCAABAAWRGPAbOF1PiRKwX3KNFCCyL1ykYqfIXp
"Contract Management - Paratransit Services Audit- August 202 0" History
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