GOVERNANCE AND AUDIT COMMITTEE Thursday, May 5, 2016 MINUTES CALL TO ORDER The Regular Meeting of the Governance and Audit Committee ( Committee ) was called to order at 4:02 p.m. by Chairperson Chavez in Conference Room 157, County Government Center, 70 West Hedding Street, San José, California. 1. ROLL CALL Attendee Name Title Status Jason Baker Member Present Jeannie Bruins Vice Chairperson Present Cindy Chavez Chairperson Present Rose Member Absent Johnny Khamis Member Present A quorum was present. 2. PUBLIC PRESENTATIONS Nancy Avila, Silicon Valley Vietnamese-American Chamber of Commerce, expressed appreciation of the VTA Project Information Office on Alum Rock Avenue and requested additional information regarding the Small Business Sustainability Program. She noted the program should be inclusive of all communities, including the Vietnamese-American community. 3. ORDERS OF THE DAY There were no Orders of the Day. CONSENT AGENDA 4. Regular Meeting Minutes of March 3, 2016 M/S/C (Bruins/Baker) to approve the Regular Meeting Minutes of March 3, 2016. 5. Ratification of Appointments to the Bicycle & Pedestrian Advisory Committee M/S/C (Bruins/Baker) to ratify appointment to the Bicycle & Pedestrian Advisory Committee for the two-year term ending June 30, 2018 of: (1) Jaime Fearer, representing the City of San José, and (2) Greg Unangst, representing the City of Mountain View. 6. Citizens Advisory Committee Appointment: North County Cities M/S/C (Bruins/Baker) to ratify the appointment of John Melton to the Citizens Advisory Committee position representing the North County Cities Group. 3331 North First Street San Jose, CA 95134-1927 Administration 408.321.5555 Customer Service 408.321.2300
7. Appointments to the El Camino Real Rapid Transit Corridor Policy Advisory Board M/S/C (Bruins/Baker) to ratify the indicated appointments to the El Camino Real Rapid Transit Policy Advisory Board. REGULAR AGENDA APPROVED [Unanimous] Consent Agenda 8. Alum Rock BRT Construction Delay Assessment Bill Eggert, Auditor General, introduced Joe Iacobucci and Pat Hagan, Subject Matter Experts from the Auditor General s Office. Mr. Hagan provided an overview of the Alum Rock Bus Rapid Transit (BRT) Construction Delay Assessment, highlighting scope of report. He noted VTA Management has acknowledged the Auditor General s suggestions, although Management Response is not included in the assessment. Mr. Iacobucci provided an overview of assessment observations in the areas of Construction Process, Contracting, Communications, and Planning & Design Coordination. He provided examples of best practices of BRT projects in the United States and an overview of the Auditor General recommendations. Upon inquiry of Chairperson Chavez, Nuria I. Fernandez, General Manager and CEO, indicated that staff will institute an internal audit function to create an audit dashboard (dashboard) that will track all completed audits. The dashboard will include information such as audit recommendations, responsible staff/department, progress of corrective actions, and status. Ms. Fernandez noted the first dashboard will be presented at the next meeting. Discussion ensued about the suitability of design-build contracts to projects. Chairperson Chavez noted it will be helpful to create a robust set of options on what strategy or approach will best fit a specific project. She added contracts should be designed in such a way that VTA maintains sufficient control and oversight. Upon inquiry of Member Baker, Ms. Fernandez explained that the Auditor General recommendations on contracting will be applied to VTA projects as appropriate. She mentioned that the Transparency tab of VTA s website, www.vta.org, has information on capital project status and budget. M/S/C (Baker/Bruins) to review and receive the Auditor General's report on the Alum Rock Bus Rapid Transit Project Construction Delay Assessment. Governance and Audit Committee Minutes Page 2 of 6 May 5, 2016
APPROVED Agenda Item #8 9. Grants Management & Compliance Assessment Mr. Hagan provided a brief summary of the assessment, noting scope, observations, and recommendations. He noted there were no significant findings and Management responses are appropriate. M/S/C (Khamis/Baker) to review and receive the Auditor General's report on the Grants Management & Compliance Assessment. APPROVED Agenda Item #9 Johnny Khamis, Member 10. Report on Follow-Up on the Procurement & Contracting Process Assessment Mr. Eggert provided a brief overview of the follow-up report. He noted that due to the significance of the recommendations, implementation of several improvements, although substantially complete, will be an ongoing process. Chairperson Chavez requested the following: 1) periodic reports (every six months) to ensure progress on outstanding items; and 2) add to the work plan the risk assessment for procurement and contracting. M/S/C (Baker/Bruins) to review and receive the Auditor General's follow-up report on the implementation status of management's action plans contained in the Procurement & Contracting Process Assessment, as amended to provide periodic reports on the status of procurement process improvements and add risk assessment to the work plan. APPROVED Agenda Item #10 11. Contract Award for Auditor General/Internal Audit Services Stephen Flynn, Senior Management Analyst, provided an overview of the revised staff report. He noted the Evaluation Panel s recommendation to award the contract to RSM US LLP for VTA Auditor General and internal audit services. Governance and Audit Committee Minutes Page 3 of 6 May 5, 2016
M/S/C (Bruins/Baker) to recommend that the Board of Directors award a task order contract to RSM US LLP for VTA Auditor General and internal audit services. The base term of the contract is five years (through June 30, 2021) for an amount not to exceed $2,250,000 (average of $450,000 per year). In addition, the contract includes two optional one-year contract extensions at a maximum of $450,000 per year; execution of the optional one-year extensions are subject to approval by the Governance & Audit Committee. APPROVED Agenda Item #11 12. VTA Ethics Hotline Program Quarterly Report Mr. Eggert stated that at the request of the Committee, the aging section was added to the VTA Ethics Hotline activity summary. and reviewed the Quarterly Ethics Hotline Summary Report. 13. VTA Grievance and Complaints Process Evelynn Tran, Assistant General Counsel, provided an overview of the complaints process, noting reports are forwarded to the appropriate department, either the Auditor General, VTA Business Services, and VTA General Counsel, depending on the issue. The departments work closely to ensure that the complaints are processed, investigated, and resolved. Alberto Lara, Director of Business Services, provided an overview of the resolution process for Title VI and customer concerns. He noted there are policies, procedures, and timelines in place for resolving the concerns/issues. Mr. Lara described the grievance procedures for VTA employees and noted that the processes and disposition are described in the labor contracts. Chairperson Chavez inquired how retaliation is managed. She further asked how the feedback is used to improve the organization s culture. Ms. Tran noted those who report using the VTA Ethics Hotline can choose to be anonymous. She added that staff is provided training to ensure that they are aware they cannot retaliate against a whistleblower. Mr. Lara stated employees indicated that consistency in disposition and handling of complaints is key. Ms. Fernandez briefly discussed the efforts that emphasizes building better culture at VTA, such as the Great Ideas platform. The goal is to be more open and inclusive and provide avenues for employees to suggest solutions to issues. Bernice Alaniz, Director of Communications, reviewed all communication efforts that promote activities, resources, and other relevant information to employees. a presentation regarding VTA Grievance and Complaints Process. Governance and Audit Committee Minutes Page 4 of 6 May 5, 2016
14. Review Status of Internal Audit Work Plan Mr. Eggert reviewed the Internal Audit Work Plan and noted a correction that the Succession Planning Assessment will be presented next month. Chairperson Chavez requested that all project activities should have a targeted completion date. an update from Auditor General Office staff on the status of projects contained in the current Internal Audit Work Plan. OTHER ITEMS 15. VTA's Strategic Planning Process Update Scott Haywood, Transportation Planning Manager, provided a brief overview of VTA s Strategic Planning Process, highlighting the following: 1) Executive Team working group discussions; 2) outreach to employees to gather input; 3) meetings with labor union leadership; and 4) draft schedule that targets Board approval of the Strategic Plan in December 2016. Members of the Committee discussed the relationship of the Strategic Plan to the following: 1) Valley Transportation Plan; 2) investment strategy; 3) balancing local and regional needs; and 4) opportunity to educate current and incoming Board Members. Chairperson Chavez requested a graphic that depicts the relationship of the various planning documents and efforts with one another. an update on VTA s Strategic Planning Process. 16. Items of Concern and Referral to Administration Member Khamis requested for a timeline of update regarding the Outreach contract audit. 17. Governance & Audit Committee Work Plan Ms. Fernandez reviewed the items to be discussed at the next committee meetings. 18. Committee Staff Report There was no Committee Staff Report. 19. Chairperson s Report Chairperson Chavez requested staff to convene a community meeting to present the Auditor General s audit findings for the Alum Rock BRT Construction Delay Assessment. 20. Determine Items for the Consent Agenda for Future Board of Directors Meetings. CONSENT: Agenda Item #5. Ratify appointment to the Bicycle & Pedestrian Advisory Committee for the two-year term ending June 30, 2018 of: (1) Jaime Fearer, representing the City of San José, and (2) Greg Unangst, representing the City of Mountain View. Agenda Item #6. Ratify the appointment of John Melton to the Citizens Advisory Committee position representing the North County Cities Group. Governance and Audit Committee Minutes Page 5 of 6 May 5, 2016
Agenda Item #7. Ratify the indicated appointments to the El Camino Real Rapid Transit Policy Advisory Board. Agenda Item #9. Review and receive the Auditor General's report on the Grants Management & Compliance Assessment. Agenda Item #10. Review and receive the Auditor General's follow-up report on the implementation status of management's action plans contained in the Procurement & Contracting Process Assessment. Agenda Item #11. Award a task order contract to RSM US LLP for VTA Auditor General and internal audit services. The base term of the contract is five years (through June 30, 2021) for an amount not to exceed $2,250,000 (average of $450,000 per year). In addition, the contract includes two optional one-year contract extensions at a maximum of $450,000 per year; execution of the optional one-year extensions are subject to approval by the Governance & Audit Committee. REGULAR: Agenda Item #8. Review and receive the Auditor General's report on the Alum Rock Bus Rapid Transit Project Construction Delay Assessment. 21. ANNOUNCEMENTS There were no Announcements. 22. ADJOURNMENT On order of Chairperson Chavez and there being no objection, the Committee was adjourned at 5:23 p.m. Respectfully submitted, Michelle Oblena, Board Assistant VTA Office of the Board Secretary Governance and Audit Committee Minutes Page 6 of 6 May 5, 2016