Report 2011-131 Recommendation 20 Responses

Report 2011-131: City of Vernon: Although Reform Is Ongoing, Past Poor Decision Making Threatens Its Financial Stability (Release Date: June 2012)

Recommendation #20 To: Vernon, City of

To the extent that the city implements policies that affect contracts, the city should also ensure that it reviews all current contracts and amends them, if necessary, to comply with newly established policies.

Annual Follow-Up Agency Response From October 2016

In August 2016, the City conducted an internal assessment to ensure that all active contracts were in compliance with newly established policies. This entailed performing a system query of the City's Contract Management software and follow up with each department on open contracts implemented prior to policy changes. Contracts greater than three years old were targeted for additional attention and action. Such contracts did not contain the most current terms and conditions adopted by the City. Department Directors were instructed to update the contracts to incorporate the new terms and conditions in order to comply with City policy. Updates to the contracts were accomplished by way of amendment or termination of the existing contract and establishment of a new updated agreement.

A related report was prepared by the Director of Finance to illustrate the citywide efforts enacted to ensure adherence to current policy.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Annual Follow-Up Agency Response From October 2015

New contracts and amended contracts are routed to various responsible departments to ensure compliance with the requirements of the City's Competitive Bidding and Purchasing Ordinance The routing process is done via the Contract/Amendment Signature Routing Form.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

The city indicates that in January 2013, the finance director and city attorney conducted a citywide review of all open contracts in the city's EDEN system to identify contracts that were not in compliance with new policies. In its October 2015 update, the city states that new contracts and amended contracts are routed to various responsible departments to ensure compliance with the requirements of the City's Competitive Bidding and Purchasing Ordinance. However, the city does not indicate whether it amended existing contracts to bring them in compliance with new policies.

Annual Follow-Up Agency Response From July 2014

Effective July 1, 2013, upon renewal of existing contracts and award of new contracts, the requirements of the Citys Competitive Bidding and Purchasing Ordinance were fully adhered to. The City did not retroactively renegotiate existing legally binding contracts.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

1-Year Agency Response

On December 18, 2012 (effective January 17, 2013), the City Council adopted Ordinance No. 1200, the Competitive Bidding and Purchasing Ordinance. Section 2.17.30 of the Ordinance provides the following terms and procedures for all contracts specific to Vernon's good governance reforms: (1) ending dates and/or expenditure caps; (2) rebidding every three years; (3) prohibition on rate increases during the contract term, except where necessary due to external factors and tied to most appropriate index, cost-of-living rate, or pass through; (4) competitive governmental rates; and (5) published on the City's website at least seven days prior to contract award. On February 25, 2013, the City Council adopted Resolution No. 2013-23, approving the general forms of personal service contract, types of insurance and indemnity, purchase order contracts, requests for proposals, and attorney services contracts. All forms of contract contain the required good governance provisions. In January 2013, the Finance Director and City Attorney conducted a citywide review of all open contracts in the City's EDEN system to identify contracts that were not in compliance with new policies. Since the adoption of the Competitive Bidding and Purchasing Ordinance, ten RFPs have been issued, all of which were posted on the City's website: (http://cityofvernon.org/rfps-for-city-services). Seven of the ten were for contracts that had previously been in effect for more than three years. Additionally, the EDEN Bid & Quote Module will be purchased and implemented in fiscal year 2013-2014, which will help City staff more effectively and efficiently track and maintain compliance with the City's good governance contract requirements.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

The city indicates that in January 2013, the finance director and city attorney conducted a citywide review of all open contracts in the city's EDEN system to identify contracts that were not in compliance with new policies. However, the city does not indicate the results and whether it amended existing contracts to bring them in compliance with newly established policies.

6-Month Agency Response

The city indicates that in January 2013 the finance director and the city administrator began a city-wide review of all open contracts in the ERP system with the intent of closing out all inactive contracts and requiring a competitive bidding/selection process for services which have not been bid in three years.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

The city has not yet addressed whether it plans to amend existing contracts to ensure compliance with newly established policies.

60-Day Agency Response

The city states that a top priority for its recently appointed city attorney will be to develop a comprehensive contracting policy resolution for city council approval, but it did not give a time frame for completion. (See 2013-406, p. 194)

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2011-131

Agency responses received after June 2013 are posted verbatim.