Report 2009-106 Recommendations and Responses in 2012-041

Report 2009-106: High-Speed Rail Authority: It Risks Delays or an Incomplete System Because of Inadequate Planning, Weak Oversight, and Lax Contract Management

Department Number of Years Reported As Not Fully Implemented Total Recommendations to Department Not Implemented After One Year Not Implemented as of Most Recent Response
High-Speed Rail Authority 2 10 5 2

Recommendation To: High-Speed Rail Authority, California

To ensure that it can respond adequately to funding levels that may vary from its business plan, the Authority should develop and publish alternative funding scenarios that reflect the possibility of reduced or delayed funding from the planned sources. These scenarios should detail the implications of variations in the level or timing of funding on the program and its schedule.

Response

The Authority continues to work with stakeholders to define alternative delivery scenarios on blended systems operations. These alternatives will have different levels of costs and differing funding needs. The Authority's business plan includes a section related to the impacts of potential delay in funding or other factors on the project. The Authority has known funding sources from Proposition 1A, $3.3 billion in committed federal funding, and cash flow projections which illustrate that private sector capital should be available when the IOS has been built. The first construction phase is fully funded. The revised business plan clearly identifies known sources and the funding gap that remains to be filled over the next 20 plus years as the full system is built out.

In the spring of 2012, during finalization of the 2012 revised business plan, the Department of Finance and the Administration identified cap-and-trade revenues as potential funding source for the high-speed rail project. Cap and trade funds are available as need, upon appropriation, as a backstop against federal and local support to complete the IOS. The Authority will work with the Department of Finance to define a specific plan for use of cap-and-trade funds, which will be presented in detail in the next business plan to be issued in draft in the fall of 2013.

  • California State Auditor's Assessment of Status: Not Fully Implemented
  • Response Date: September 2012

Recommendation To: High-Speed Rail Authority, California

In order to respond effectively to circumstances that could significantly delay or halt the program, the Authority should ensure that it implements planned actions related to managing risk.

Response

In August 2012, the Authority appointed a dedicated risk manager. He served as a risk manager on a significant public works mega-project for the last six years and has over 28 years of transportation experience, including contract management, design, maintenance, and mega-project construction. The Authority's risk manager will manage and coordinate all aspects of the Authority's comprehensive risk management program. The Authority's risk management plan is being updated to encompass the risk manager's roles, responsibilities, and accountability. The risk manager will attend risk management meetings and workshops. The risk manager along with staff, project management and the project management oversight, will continue to focus on refining and enhancing the Authority's risk management program and ensure that risks and opportunities are promptly and prudently managed. Additionally, the Authority's internal audit office hired a senior management auditor with 16 years of transportation related audit experience, expanding the audit office's ability to identify organization and program risks and provide recommendations for risk mitigation.

  • California State Auditor's Assessment of Status: Fully Implemented
  • Completion Date: September 2012
  • Response Date: September 2012

Recommendation To: High-Speed Rail Authority, California

To avert possible legal challenges, the Authority should ensure that the review group adheres to the Meeting Act or seek a formal opinion from the Office of the Attorney General regarding whether the review group is subject to this act.

Response

Under California Public Utilities Code section 185035 individuals are appointed to an independent peer review group by the Treasurer, the Controller, the Director of Finance and the Secretary of Business, Transportation and Housing. The peer review group evaluates the Authority's funding plans and prepares its independent judgment as to the feasibility and reasonableness of the plans, appropriateness of assumptions, analysis and estimates, and any other observations or evaluations it deems necessary. It reports its findings to the Legislature. While the Authority must provide any, and all, information requested by the peer review group, it does not have the legal authority to direct how the peer review group conducts its meetings including providing legal advice to the group about open meeting law requirements.

  • California State Auditor's Assessment of Status: Will Not Implement
  • Response Date: September 2012

Recommendation To: High-Speed Rail Authority, California

To ensure that it does not run out of funds for administrative and preconstruction tasks prematurely, the Authority should track expenditures for these activities and develop a long-term spending plan for them. It also should develop procedures and systems to ensure that it complies with Recovery Act requirements.

Response

The Authority has implemented a monthly control procedure and supporting spreadsheet that collects monthly cost data from CALSTARS and reports on cumulative information for administrative and pre-construction costs. The procedure and spreadsheet also supports the projections of future costs. The reporting template is updated monthly for actual results while projections for administrative and pre-construction costs will be updated annually by management supported by the PMT.

  • California State Auditor's Assessment of Status: Fully Implemented
  • Completion Date: September 2012
  • Response Date: September 2012

Current Status of Recommendations

All Recommendations in 2012-041