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HomeMy WebLinkAboutAgenda Report - August 16, 2000 H-05COUNCIL CITY OF LODI COMMUNICATION AGENDA TITLE: Approve Response to Grand Jury Final Report Case #2199: "Manteca - Lathrop Wastewater Treatment Contract — Contract Management and Tracking" MEETING DATE: SUBMITTED BY: August 16, 2000 Deputy City Manager RECOMMENDED ACTION: That Council approve the attached response to the Grand Jury Final Report Case #2199 "Manteca -Lathrop Wastewater Treatment Contract — Contract Management and Tracking," BACKGROUND INFORMATION: The San Joaquin County Grand Jury initiated a review of the Manteca -Lathrop Wastewater Treatment Contract. The study was subsequently expanded to include contract management and tracking practices of all seven cities in San Joaquin County. The attached Final Report (Attachment B) as prepared by the Grand Jury requires that cities respond to their findings and to their specific recommendations. A response from the City of Lodi has been prepared (Attachment A) and must be approved by the City Council prior to submittal to the Presiding Judge of the Superior Court. Staff has reviewed current practices for contract management and tracking and basically concurs with the Grand Jury's recommendation that all cities should have a written policy. As such, staff will evaluate various methods of tracking contracts (i.e. "tickler" systems) and will work with the Information Systems Manager to develop a recommended course of action. It should be noted that no city in San Joaquin County has a comprehensive written contract management policy, however all cities have adequate practices in place for standard transactions. FUNDING: Not Applicable Respectfully, Janet S. Keeter Attachements APPROVED' V4t__z,_X,� - H. &xon Flynn — C Manager cSfep ea Tann MAYOR I fan xaAfanii i MAYOR PRO TEMPORE cSusaa .7fifc�coc� COUNCIL MEMBER .iLrei,66 jeaad COUNCIL MEMBER 9xiffip `9. Tenaino COUNCIL MEMBER Gif,.f C.dir OFFICE OF THE CITY MANAGER CITY HALL, 221 WEST PINE STREET LOBI, CA 95240 (209) 333-6700 FAX (209) 333-6807 August 8, 2000 Presiding Judge San Joaquin County Superior Court Yd Floor County Courthouse Stockton, CA 95202 Your Honor, AML -1011M "A" .7f oixoa 7y" CITY MANAGER cSusan � ..�fac�sfoa CITY CLERK ,T.daff-I .7fays CITY ATTORNEY The City of Lodi is in receipt of the Grand Jury's Final Report Case No. 2199 entitled "Manteca - Lathrop Wastewater Treatment Contract — Contract Management and Tracking." As such, the cities of Escalon, Lathrop, Lodi, Manteca, Ripon, Stockton and Tracy are required to respond to the findings pursuant to Sections 933.(c) of the Penal Code. Specifically, the Grand Jury has noted their findings on Page III of the Report (Items #8 - #15) and has requested a response to those findings in addition to a response to recommendations noted on Pages IV-V (Section E.a — E.d). The City of Lodi therefore provides the following responses: FINDINGS: ALL CITIES — The City of Lodi concurs with Items #8 - #15 noted on Page III of the Final Report RECOMMENDATIONS: ALL CITIES — "The City Manager of each City should establish a written policy on Contract Management and Tracking as part of his Fiscal Management Policies. " The City of Lodi currently has a repository for contracts which are maintained by the City Clerk's Office (please see Attachments). Contracts, upon approval by the City Council, are ultimately routed to the City Clerk's Office for filing and are readily accessible to members of staff as well as to members of the public. It should be noted, however, that this system is not intended for tracking contract compliance or as an auditing tool. On the contrary, each Department has its own means for tracking contracts, which has proven successful thus far. The repository does provide the City with a one-stop shop for accessing the documents. The City Clerk's contract files do contain the recommended information as noted in Section E.a.i. — E.a.vi: i. A copy or description of the contract and where it is stored ii. Who the contract is with iii. The term (length) of the contract iv. Who, by title or position, administers the contract V. Who, by title or position, can approve changes vi. Other information deemed useful The Grand Jury's recommendation to establish a written policy regarding Contract Management and Tracking is a good recommendation which will be brought back to the City Council for review within the calendar year 2000. The Grand Jury further notes in Section E.b. "A requirement that each contract be read and reviewed at least yearly by the appointed contract administrator. This could be done as part of the Budget Process. " Each City Department oversees their own contracts with regard to Electric Utility contract rates, Public Works landscaping, Information Systems equipment, janitorial services, etc. The respective Departments budget appropriately each fiscal year depending on their contracts. However, it would be prudent for the City to include this as a written policy for budget preparation. Section E.c. of the Final Report recommends "Establishment of a `tickler system' that would help with meeting important milestones established in any and all contracts. " The City of Lodi's Information Systems Manager will study this recommendation as it may be only a matter of creating a master calendar through Microsoft Outlook and entering the data when the contracts are approved by the City Council. The final recommendation, Section E.d. "Standardize as many aspects of contracts as possible" is currently being achieved by the City Attorney's Office. Every contract must be approved as to format by the City Attorney before it goes forward to the City Council for consideration. This recommendation can be incorporated into a written policy. On behalf of the City of Lodi, I thank you for your interest in our City procedures and can assure you that further consideration of the aforementioned recommendations will be brought before the City Council. Respectfully, Stephen J. Mann Mayor Attachments ;yOF<O U CONTRACT RA POLICY August 9, �pOP I Jacqueline L. Taylor Deputy City Clerk SUBJECT: AGREEMENTS AND CONTRACTS Upon approval of the City Council, contracts and agreements are tracked to completion with identifying details such as the responsible department, council approval date, vendor information and special instructions (such as recording the document or an additional deed with the document). Contracts received in the City Clerk's office are processed as follows: Confirm City Council approval and Risk Manager approval of insurance certificate. Prepare proper documentation and attach routing form - route for signature. Officially attest, seal and distribute. One fully executed original is retained and processed for permanent filing in the City Clerk's Office. We currently process several agreements per month and maintain more than 2,000 past and active contracts and agreements. Documents are logged, issued a permanent contract number and placed in chronological order in secured filing cabinets. Each calendar year as part of our City-wide Records Retention Program, contract are reviewed for possible destruction based on completion date, specific or routine coverage and final review by originating department. An itemized list of documents is brought before the City Council for official approval prior to destruction. Contracts are a crucial part of our records management procedures, and are accessible only to City Clerk's office personnel. Departments and interested parties may review contracts or request copies, but these items never leave the possession of the City Clerk's office. CONTRACT ROUTIN FOR May 25, , Jacqueline L. Taylor Interim City Clerk SUBJECT: ROUTING OF CONTRACTS FOR SIGNATURE 1. Route your contracts for signature using a "Contract Routing Slip" (Exhibit A). Take a moment to add your name and extension, and to check the boxes indicating actions/signatures required. 2. Indicate on your routing sheet the date the City Council approved the contract (if applicable). 3. Verify there is a designated place for the City of Lodi representative to sign (Manager or Mayor), plus the City Attorney and City Clerk on your contract documents. If signature lines do not exist, add them to your documents before routing (as shown in Exhibit B). a. Mark each page requiring signature(s), and route contracts in a Contract or Signature folder. Followin_a Approval of Council: The City Clerk's office should receive a minimum of three originals of each contract requiring signatures, to be fully executed and then distributed as follows: • City Clerk for Contract Files • Contractor/Service Provider (we will mail or return to you for mailing to contractor) • Originating Department NOTE: If an insurance certificate is required as part of a contract/agreement, it should be approved by the Risk Manager and enclosed with the documents. Contracts will be put on hold until the insurance certificate is approved. ALSO NOTE: It is the originating department's responsibility to forward a copy of each contract to the Finance Department for their records and distribution of funds/payment of services. When Providing Contracts With Your Council Communication For The Council Packet: The City Clerk's office should receive a minimum of four originals of each contract requiring signatures, to be fully executed following Council approval, and then distributed as follows: • City Clerk for Council Packet • City Clerk for Contract Files • Contractor/Service Provider (we will mail or return to you for mailing to contractor) • Originating Department NOTE: If an insurance certificate is required as part of a contractlagreement, it should be approved by the Risk Manager and enclosed with the documents. Contracts will be put on hold until the insurance certificate is approved. ALSO NOTE: It is the originating department's responsibility to forward a copy of each contract to the Finance Department for their records and distribution of funds/payment of services. Following these instructions will ensure that contracts are routed for signature and distributed in a correct and timely manner. By the same token, discrepancies and shortfalls in the system may cause delays in the process. If you have any questions, please don't hesitate to give me a call. Jackie @ x2601 CONTRACT ROUTING SLIP Contract Name: originating Department: $ Batt dflnpltur dept -43 E i d SC 4 #K plats;Recd , �A�nta�°�,��4Tj[Itd$$ `' Date'Fiecd -,cit 'A #=centra a reementIan urge Date'Out t<br Cit�r i r -3 signature "Approved as tQ Form' ar> d return to Dept., or. forward I W um to Departmer► Finance/Accountant Certificate of tnsurance required? Yes N#r Date Out F-1 Risk Manager Date Recd Date Out ❑ Certificate of Insurance required? Liability: Yes No. Alcoholic Beverage: Yes No. Worker's Compensation: Yes No. If Certificate is not attached or is incorrect, return to Department. Certificates approved as submitted: Yes No. Additional Instructions: City��gager, Date. Recd Date Out v F rGity Marxag�r �gnature and fgnnlard to City Cip or Y„ .' Fr.iiy Niatsger stngture;?nd return to. bepartmgnt ;: , F-1 City Clerk Date Recd Date Out ❑ For City Clerk signature and filing in contract file. ❑ Mail original to ❑ Return original and/or copy to Department. Additional instructions: at i d SC 4 raY , �A�nta�°�,��4Tj[Itd$$ `' Date'Fiecd Date'Out ❑ . For Human Resources .Director signature • E I W um to Departmer► Finance/Accountant Date Recd Date Out SAMPLE OF SIGNATURES REQUIRED. FOR CITY MANAGER SIGNATURE PLEASE PREPARED AS BELOW: H. Dixon Flynn City Manager Approved as to Form: Randall A. Hays City Attorney ATTEST: Jacqueline L. Taylor Interim City Clerk FOR MAYOR SIGNATURE PLEASE PREPARE AS BELOW: Stephen J. Mann Mayor, City of Lodi Approved as to Form: Randall A. Hays City Attorney ATTEST: Jacqueline L. Taylor Interim City Clerk ATTACHMENT "B" Gran JIMT County of San Joaquin Courthouse 222 East Weber Avenue -Room 303 Stockton, California 95202 (209)468-3855 FINAL REPORT CASE #12199: MANTECA-LATHROP WASTEWATER TREATMENT CONTRACT CONTRACT MANAGEMENT & TRACKING Cities of Escalon, Lathrop, Lodi, Manteca, Ripon, Stockton and Tracy REASON FOR INVESTIGATION This investigation was initiated by the San Joaquin County Civil Grand Jury (SJCCGJ) as a review of the Manteca—Lathrop Wastewater Treatment Contract. The investigation was expanded to include contract management and tracking at all seven (7) San Joaquin County Cities. BACKGROUND The issue with the Manteca—Lathrop Wastewater contract was Manteca's long-term under -billing of Lathrop for services provided. Billing and payment procedures are described as terms of the contract. Those terms require that Lathrop pay for its proportional share of the actual operation and maintenance of wastewater treatment. The apportioning of the cost is to be based on the respective flows, and sewage strengths (BOD and Suspended Solids) from each party. Manteca billed a flat monthly charge, and Lathrop paid the bill. That flat rate billing/payment practice went on since 1987 until it was challenged in November of 1999. The SJCCGJ investigation started after the problem surfaced and the investigation was later expanded to all cities in an effort to determine if this was an isolated condition, or if it could happen with other contracts and/or other Cities. METHOD OF INVESTIGATION The SJCCGJ obtained and reviewed a copy of the Manteca — Lathrop Wastewater Treatment Contract. We met with City of Manteca staff for an overview and requested METHOD OF INVESTIGATION continued additional related documents. We then met with the City of Lathrop staff for their overview. Lathrop staff provided related documents. We reviewed pertinent related documents including: • Annual Sewer Budgets since 1989 • Lathrop Billing since 1989 • Portions of the Annual Audit pertaining to the Sewer Account since 1989 • Manteca — Raymus Village Contract • Correspondence The investigation was expanded beyond the original Manteca—Lathrop contract issues. Letters were sent to all seven (7) cities in San Joaquin County requesting copies or written descriptions of their Contract Management Policies. All cities contacted responded. Interviews were conducted with the responsible staff members from each City. Manteca's meeting also included follow up questions and requests for copies of additional correspondence relative to the Manteca -Lathrop Wastewater Contract administration. FINDINGS: CITY OF MANTECA 1. The City of Manteca did not, and is still not administering the Manteca—Lathrop Wastewater Treatment and Disposal Contract consistent with contract provisions. Manteca's practice led to under -billing for services provided and they have not established a Replacement Account. 2. The City of Manteca has billed the City of Lathrop 51,093,574.20 as the balance due for sewer services provided between January 1, 1991 and December 31, 1999. This bill is based on a "fixed cost per unit sewer rate", rather than the "proportionate share of the actual costs based on usage" as provided by the contract, (Section V: Maintenance and Operation and Replacement, Subparagraph B: District's Share of Costs). 3. The City of Manteca staff, in our second interview, stated that they are implementing a "Records Management System" on a schedule of one department per year. 4. Over the course of the investigation, the City of Manteca has not shown substantial progress toward determining and/or increasing the reliability of the City's contract checkpoints. 5. The City of Manteca has not adequately addressed Manteca -Lathrop Wastewater Treatment Contract problems or the cause for these problems. The City could have dealt with the problem more aggressively. II FINDINGS: CITY OF LATHROP 6. The City of Lathrop assumed the Lathrop County Water District's position in the Contract/Agreement between the Lathrop County Water District and the City of Manteca dated March 5, 1984. 7. The City of Lathrop has failed to submit to the City of Manteca a yearly written summary of the projected daily peak month flow, BOD and suspended solids for each year during the succeeding five (5) year period, (Section IV: District Capacity Rights, Subparagraph D: Future Capacity Option). FINDINGS: ALL CITIES 8. No City responded to our request with a comprehensive written Contract Management Policy. Our interview process showed that all Cities have adequate practices in place for standard transactions. Many Cities have good procedures to help insure contractual compliance. 9. The procedures for contract management were generally regarded and addressed as part of the Cities overall fiscal management responsibilities. The same checkpoints were applied to all financial transactions whether governed by contract or ordinance. 10. While the procedures showed many similarities from City to City, they also varied greatly depending upon the size of the City, the size of City staff, and management styles. 11. All Cities had ordinances in place or followed the Government Code provisions that pertain to issuing contracts. 12. Part of the procedure in each City included multiple checkpoints for all transactions and watching for exceptions in the revenue stream. 13. Each City determines its own level of required checks and balances. They consider the costs of applying the contract controls they employ weighed against the additional safety these controls provide. 14. The Cities of Escalon and Stockton monitor contracts through a single checkpoint, other Cities monitor them through multiple checkpoints. 15. Some Cities find that standardizing contract elements simplified contract interpretation and management. III FINDINGS: ALL CITIES continued 16. During investigation process of the various Cities we discovered that some of the Cities followed what we felt were good and innovative practices. • Stockton: Good Purchasing Booklet; Utilizes "Tickler System" (Tickler System is a program that tracts and reminds employees and departments of bench mark dates and required performances) • Tracy: Standardizes Contracts; Innovative Fire Department Financing through use of Joint Power Authority • Escalon: New "Tickler System" • Ripon: Standardization of Contract Review Schedules; Independent Audits of all Contracts • Lathrop: Contracts with Sheriff's Department for Police Services RECOMMENDATIONS: CITY OF MANTECA A. Due to the apparent magnitude of the under -billing and the continued non- compliance with contract requirements, the Manteca City Council should retain an independent expert to evaluate the Manteca -Lathrop Wastewater Treatment Contract relative to determining contract compliance requirements and proper billing to the City of Lathrop. B. The Manteca City Council should obtain an Independent Management Audit to review the City's method of contract administration and financial controls. C. The City of Manteca should accelerate the implementation of its "Records Management System". RECOMMENDATIONS: CITY OF LATHROP D. The City of Lathrop should review and adhere to the provisions of the Manteca - Lathrop Wastewater Treatment Contract including preparation of the Annual Five -Year Plan. RECOMMENDATIONS: ALL CITIES E. The City Manager of each City should establish a written policy on Contract Management and Tracking, as part of his Fiscal Management Policies. Elements of that policy should include: a. A central file for Management and Tracking of all contracts. This file should include for each contract IV RECOMMENDATIONS: ALL CITIES continued i. A copy or description of the contract and where it is stored ii. Who the contract is with iii. The term (length) of the contract iv. Who, by title or position, administers the contract v. Who, by title or position, can approve changes vi. Other information deemed useful b. A requirement that each contract be read and reviewed at least yearly by the appointed contract administrator. This could be done as part of the Budget Process. c. Establishment of a "tickler system" that would help with meeting the important milestones established in any and all contracts. d. Standardize as many aspects of contracts as possible. RESPONSE REQUIRED Pursuant to Sections 933.05 of the Penal code: 1. The City of Manteca for Findings T1 - 95 and Recommendations "A", `B", and "C" shall report to the Presiding Judge of the San Joaquin County Superior Court, in writing and within 90 days of the publication of this Report. That statute requires that as to each finding in the report, the response indicate one of the following: a. The respondent agrees with the finding. b. The respondent disagrees Nrith the finding with an explanation of the reasons therefore. Section 933.05 also requires as to each recommendation, the response indicate one of the following: a. The recommendation has been implemented, with a summary of the action taken. b. The recommendation has not yet been implemented, but will be, with a timeframe for implementation. c. The recommendation requires further analysis, with an explanation of the scope of the analysis and a timeframe not to exceed six (6) months. V RESPONSE REQUIRED continued d. The recommendation will not be implemented, with an explanation therefore. 2. The City of Lathrop for Findings 46 and #7 and Recommendation "D" shall report to the Presiding Judge of the San Joaquin County Superior Court, in writing and writhin 90 days of the publication of this Report. That statute requires that as to each finding in the report, the response indicate one of the following: a. The respondent agrees with the finding. b. The respondent disagrees with the finding with an explanation of the reasons therefore. Section 933.05 also requires as to each recommendation, the response indicate one of the following: a. The recommendation has been implemented, with a summary of the action taken. b_ The recommendation has not yet been implemented, but will be, with a timeframe for implementation. c. The recommendation requires further analysis, with an explanation of the scope of the analysis and a timeframe not to exceed six (6) months. d. The recommendation will not be implemented, with an explanation therefore. 03)All San Joaquin County Cities (Escalon, Lathrop, Lodi, Manteca, Ripon, Stockton and Tracy) for Findings 98 through 415 and Recommendation "E" shall report to the Presiding Judge of the San Joaquin County Superior Court, in writing and within 90 days of the publication of this Report. That statute requires that as to each Raft in the report, the response indicate one of the following: a. The respondent agrees with the finding. b. The respondent disagrees with the finding with an explanation of the reasons therefore. Section 933.05 also requires as to each recommendation, the response indicate one of the following: a. The recommendation has been implemented, with a summary of the action taken. V1 RESPONSE REQUIRED continued b. The recommendation has not yet been implemented, but will be, with a timeframe for implementation. c. The recommendation requires further analysis, with an explanation of the scope of the analysis and a timeframe not to exceed six (6) months. d. The recommendation will not be implemented, with an explanation therefore. VII RESOLUTION NO. 2000-155 A RESOLUTION OF THE LODI CITY COUNCIL APPROVING RESPONSE TO GRAND JURY FINAL REPORT RELATING TO MANTECA-LATHROP WASTEWATER TREATMENT CONTRACT — CONTRACT MANAGEMENT AND TRACKING ------------------------------------------------------------------- WHEREAS, the San Joaquin County Grand Jury has initiated a review of the Manteca -Lathrop Wastewater Treatment Contract; and WHEREAS, the review was subsequently expanded to include contract management and tracking practices of all seven cities in San Joaquin County; and WHEREAS, the Grand Jury Final Report (Attachment B attached hereto) requires that the seven cities respond to the findings and to their specific recommendations; and WHEREAS, the City of Lodi has prepared a response and is attached hereto marked Exhibit A; and WHEREAS, staff recommends that the City Council approve the written response, and authorize and direct the Mayor to execute the letter of response as set out in Exhibit A attached hereto. NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Lodi does hereby approve the City's response to the Grand Jury Report, and further authorizes the Mayor to execute the letter of response. Date: August 16, 2000 1 hereby certify that Resolution No. 2000-155 was passed and adopted by the Lodi City Council in a regular meeting held August 16, 2000 by the following vote: AYES: COUNCIL MEMBERS — Hitchcock, Land, Nakanishi, Pennino and Mann (Mayor) NOES: COUNCIL MEMBERS — None ABSENT: COUNCIL MEMBERS — None ABSTAIN: COUNCIL MEMBERS — None Susan J. Blackst�Y , City Clerk 2000-155 ,5kps" Dann MAYOR `.7fan xaAanissi MAYOR PRO TEMPORE csusan }fifc.Scocf COUNCIL MEMBER XcA6'6and COUNCIL MEMBER .l�6iffp `,�. 1nea.lvro COUNCIL MEMBER Gtz�y- * of 60 cfi OFFICE OF THE CITY MANAGER CITY HALL. 221 WEST PINE STREET Lool. CA 95240 (209) 333-6700 FAx (209) 333-6807 August 8, 2000 Presiding Judge San Joaquin County Superior Court 3' Floor County Courthouse Stockton, CA 95202 Your Honor, AIUL]31IQdT "An .if. Dhw. _9fyn., CITY MANAGER cSusan Y 2facis/on CITY CLERK .`Xaadaff�. _7fy, CITY ATTORNEY The City of Lodi is in receipt of the Grand Jury's Final Report Case No. 2199 entitled "'Manteca - Lathrop Wastewater Treatment Contract — Contract- Management and Tracking." As such, the cities of Escalon, Lathrop, Lodi, Manteca, Ripon, Stockton and Tracy are required to respond to the findings pursuant to Sections 933.(c) of the Penal Code. Specifically, the Grand Jury has noted their findings on Page III of the Report (Items #8 - #15) and has requested a response to those findings in addition to a response to recommendations noted on Pages IV-V (Section E.a — E.d). The City of Lodi therefore provides the following responses: FINDINGS: ALL CITIES — The City of Lodi concurs with Items #8 - #15 noted on Page III of the Final Report RECOMMENDATIONS: ALL CITIES — "The City Manager of each City should establish a written policy on Contract Management and Tracking as part of his Fiscal Management Policies. " The City of Lodi currently has a repository for contracts which are maintained by the City Clerk's Office (please see Attachments). Contracts, upon approval by the City Council, are ultimately routed to the City Clerk's Office for filing and are readily accessible to members of staff as well as to members of the public. It should be noted, however, that this system is not intended for tracking contract compliance or as an auditing tool. On the contrary, each Department has its own means for tracking contracts, which has proven successful thus far. The repository does provide the City with a one-stop shop for accessing the documents. The City Clerk's contract files do contain the recommended information as noted in Section E.a.i. — E.a.vi: i. A copy or description of the contract and where it is stored ii. Who the contract is with iii. The term (length) of the contract iv. Who, by title or position, administers the contract V. Who, by title or position, can approve changes vi. Other information deemed useful The Grand Jury's recommendation to establish a written policy regarding Contract Management and Tracking is a good recommendation which will be brought back to the City Council for review within the calendar year 2000. The Grand Jury further notes in Section E.b. "A requirement that each contract be read and reviewed at least yearly by the appointed contract administrator. This could be done as part of the Budget Process. " Each City Department oversees their own contracts with regard to Electric Utility contract rates, Public Works landscaping, Information Systems equipment, janitorial services, etc. The respective Departments budget appropriately each fiscal year depending on their contracts. However, it would be prudent for the City to include this as a written policy for budget preparation. Section E.c. of the Final Report recommends "Establishment of a `tickler system' that would help with meeting important milestones established in any and all contracts. " The City of Lodi's Information Systems Manager will study this recommendation as it may be only a matter of creating a master calendar through Microsoft Outlook and entering the data when the contracts are approved by the City Council. The final recommendation, Section E.d. "Standardize as many aspects of contracts as possible" is currently being achieved by the City Attorney's Office. Every contract must be approved as to format by the City Attorney before it goes forward to the City Council for consideration. This recommendation can be incorporated into a written policy. On behalf of the City of Lodi, I thank you for your interest in our City procedures and can assure you that further consideration of the aforementioned recommendations will be brought before the City Council. Respectfully, Stephen J. Mann Mayor Attachments s CONTRACT POLICY August 9, 2000 Jacqueline L. Taylor Deputy City Clerk SUBJECT: AGREEMENTS AND CONTRACTS Upon approval of the City Council, contracts and agreements are tracked to completion with identifying details such as the responsible department, council approval date, vendor information and special instructions (such as recording the document or an additional deed with the document). Contracts received in the City Clerk's office are processed as follows: Confirm City Council approval and Risk Manager approval of insurance certificate. Prepare proper documentation and attach routing form - route for signature. Officially attest, seal and distribute. One fully executed original is retained and processed for permanent filing in the City Clerk's Office. We currently process several agreements per month and maintain more than 2,000 past and active contracts and agreements. Documents are logged, issued a permanent contract number and placed in chronological order in secured filing cabinets. Each calendar year as part of our City-wide Records Retention Program, contract are reviewed for possible destruction based on completion date, specific or routine coverage and final review by originating department. An itemized list of documents is brought before the City Council for official approval prior to destruction. Contracts are a crucial part of our records management procedures, and are accessible only to City Clerk's office personnel. Departments and interested parties may review contracts or request copies, but these items never leave the possession of the City Clerk's office. CONTRACT ROUTING ' May -75,2000 Jacqueline L. Taylor Interim City Clerk SUBJECT: ROUTING OF CONTRACTS FOR SIGNATURE 1. Route your contracts for signature using a "Contract Routing Slip" (Exhibit A). Take a moment to add your name and extension, and to check the boxes indicating actions/signatures required. 2. Indicate on your routing sheet the date the City Council approved the contract (if applicable). 3. Verify there is a designated place for the City of Lodi representative to sign (Manager or Mayor), plus the City Attorney and City Clerk on your contract documents. If signature lines do not exist, add them to your documents before routing (as shown in Exhibit B). a. Mark each page requiring signature(s), and route contracts in a Contract or Signature folder. Following Approval of Council: The City Clerk's office should receive a minimum of three originals of each contract requiring signatures, to be fully executed and then distributed as follows: • City Clerk for Contract Files • Contractor/Service Provider (we will mail or return to you for mailing to contractor) • Originating Department NOTE: If an insurance certificate is required as part of a contractiagreement, it should be approved by the Risk Manager and enclosed with the documents. Contracts will be put on hold until the insurance certificate is approved. ALSO NOTE: It is the originating department's responsibility to forward a copy of each contract to the Finance Department for their records and distribution of funds/payment of services. When Providing Contracts With Your Council Communication For The Council Packet: The City Clerk's office should receive a minimum of four originals of each contract requiring signatures, to be fully executed following Council approval, and then distributed as follows: • City Clerk for Council Packet • City Clerk for Contract Files • Contractor/Service Provider (we will mail or return to you for mailing to contractor) • Originating Department NOTE: If an insurance certificate is required as part of a contractiagreement, it should be approved by the Risk Manager and enclosed with the documents. Contracts will be put on hold until the insurance certificate is approved. ALSO NOTE: It is the originating department's responsibility to forward a copy of each contract to the Finance Department for their records and distribution of funds/payment of services. Following these instructions will ensure that contracts are routed for signature and distributed in a correct and timely manner. By the same token, discrepancies and shortfalls in the system may cause delays in the process. If you have any questions, please don't hesitate to give me a call. Jackie @ x2601 CONTRACT ROUTING SLIP Contract Name: originating Department: Initial when completed by your Dept. 4 City -Attorney Date Recd Date Out (_J For City Attorney review of contract/agreement language. For City Attorney signature "Approved as to Form" and return to Dept., or forward to ElCertificate of Insurance required? Yes No ❑ Risk Manager Date Recd Date Out E] Certificate of Insurance required? Liability: Yes No. Alcoholic Beverage: Yes No. Worker's Compensation: Yes No. If Certificate is not attached or is incorrect, return to Department. Certificates approved as submitted: Yes No. Additional instructions: ❑ City Manager Date Recd Date Out E] For City Manager signature and forward to City Clerk, or For City Manager signature and return to Department. F] City Clerk For City Clerk signature and filing in contract file. Mail original to Date Recd Date Out Return original and/or copy to Department. Additional instructions: ❑ Human Resources Date Recd Date Out riFor Human Resources Director signature. EJReturn to Department. F-1 Finance/Accountant Date Real Date Out SAMPLE OF SIGNATURES REQUIRED. FOR CITY MANAGER SIGNATURE FOR MAYOR SIGNATURE PLEASE PREPARED AS BELOW: PLEASE PREPARE AS BELOW: H. Dixon Flynn Stephen J. Mann City Manager Mayor, City of Lodi Approved as to Form: Approved as to Form: Randall A. Hays Randall A. Hays City Attorney City Attorney ATTEST: ATTEST: Jacqueline L. Taylor Jacqueline L. Taylor Interim City Clerk Interim City Clerk AMCIENENP n$n Grand XuM County of San Joaquin Courthouse 222 East Weber Avenue -Room 303 Stockton, California 95202 (209)468-3855 FINAL REPORT CASE #2199: MANTECA-LATHROP WASTEWATER TREATMENT CONTRACT CONTRACT MANAGEMENT & TRACK1NG Cities of Escalon, Lathrop, Lodi, Manteca, Ripon, Stockton and Tracy REASON FOR P+VESTIGATION This investigation was initiated by the San Joaquin County Civil Grand Jury (SJCCGJ) as a review of the Manteca—Lathrop Wastewater Treatment Contract. The investigation was expanded to include contract management and tracking at all seven (7) San Joaquin County Cities. BACKGROUND The issue with the Manteca—Lathrop Wastewater contract was Manteca's Ion; -term under -billing of Lathrop for services provided. Billing and payment procedures are described as terms of the contract. Those terms require that Lathrop pay for its proportional share of the actual operation and maintenance of wastewater treatment. The apportioning of the cost is to be based on the respective flows, and sewage strengths (BOD and Suspended Solids) from each party. Manteca billed a flat monthly charge, and Lathrop paid the bill. That flat rate billing/payment practice went on since 1987 until it was challenged in November of 1999. The SJCCGJ investigation started after the problem surfaced and the investigation was later expanded to all cities in an effort to determine if this was an isolated condition, or if it could happen with other contracts and/or other Cities. i<IETHOD OF LN'VESTIGATION The SJCCGJ obtained and reviewed a copy of the Manteca — Lathrop Wastewater Treatment Contract. We met with City of Manteca staff for an overview and requested METHOD OF INVESTIGATION continued additional' related documents. We then met with the City of Lathrop -gaff for their overview. Lathrop staff provided related documents. We reviewed pertinent related documents including: • Annual Sewer Budgets since 1989 • Lathrop Billing since 1989 • Portions of the Annual Audit pertaining to the Sewer Account since 1989 • Manteca — Raymus Village Contract • Correspondence The investigation was expanded beyond the original Manteca—Lathrop contract issues. Letters were sent to all seven (7) cities in San Joaquin County requesting copies or written descriptions of their Contract Management Policies. All cities contacted responded. Interviews were conducted with the responsible staff members from each City. Manteca's meeting also included follow up questions and requests for copies of additional correspondence relative to the Manteca -Lathrop Wastewater Contract administration. FINDINGS: CITY OF MANTECA 1. The City of Manteca did not, and is still not administering the Manteca—Lathrop Wastewater Treatment and Disposal Contract consistent with contract provisions. Manteca's practice led to under -billing for services provided and they have not established a Replacement Account. 2. The City of Manteca has billed the City of Lathrop S1,093,574.20 as the balance due for sewer services provided between January 1, 1991 and December 31, 1999. This bill is based on a "fixed cost per unit sewer rate', rather than the "proportionate share of the actual costs based on usage" as provided by the contract, (Section V: Maintenance and Operation and Replacement, Subparagraph B: District's Share of Costs). 3. The City of Manteca staff, in our second interview, stated that they are -implementing a "Records Management System" on a schedule of one department per year. 4. Over the course of the investigation, the City of Manteca has not shown substantial progress toward determining and/or increasing_ the reliability of the City's contract checkpoints. 5. The City of Manteca has not adequately addressed Manteca -Lathrop Wastewater Treatment Contract problems or the cause for these problems. The City could have dealt with the problem more aggressively. II FINDINGS: CITY OF LATHROP 6. The City of Lathrop assumed the Lathrop County Water District's position in the Contract/Agreement between the Lathrop County Water District and the City of Manteca dated March 5, 1984. 7. The City of Lathrop has failed to submit to the City of Manteca a yearly written summary of the projected daily peak month flow, BOD and suspended solids for each year during the succeeding five (5) year period, (Section IV: District Capacity Rights, Subparagraph D: Future Capacity Option). FINDINGS: ALL CITIES 8. No City responded to our request with a comprehensive written Contract Management Policy. Our interview process showed that all Cities have adequate practices in place for standard transactions. Many Cities have good procedures to help insure contractual compliance. 9. The procedures for contract management were generally regarded and addressed as part of the Cities overall fiscal management responsibilities. The same checkpoints were applied to all financial transactions whether governed by contract or ordinance. 10. While the procedures showed many similarities from City to City, they also varied greatly depending upon the size of the City, the size of City staff, and management styles. 11. All Cities had ordinances in place or followed the Government Code provisions that pertain to issuing contracts. 12. Part of the procedure in each City included multiple checkpoints for all transactions and watching for exceptions in the revenue stream. 13. Each City determines its own level of required checks and balances. They consider the costs of applying the contract controls they employ weighed against the additional safety these controls provide. 14. The Cities of Escalon and Stockton monitor contracts through a single checkpoint, other Cities monitor them through multiple checkpoints. - 15. Some Cities find that standardizing contract elements simplified contract interpretation and management. III FINDINGS: ALL CITIES continued 16. During investigation process of the various Cities we discovered that some of the Cities followed what we felt were good and innovative practices. • Stock --ton: Good Purchasing Booklet; Utilizes "Tickler System" (Tickler System is a program that tracts and reminds employees and departments of bench mark dates and required performances) • Tracy: Standardizes Contracts; Innovative Fire Department Financing through use of Joint Power Authority • Escalon: New "Tickler System" • Ripon: Standardization of Contract Review Schedules; Independent Audits of all Contracts - • Lathrop: Contracts with Sheriff's Department for Police Services RECOMMENDATIONS: CITY OF NIANTECA A. Due to the apparent magnitude of the under -billing and the continued non- compliance with contract requirements, the Manteca City Council should retain an independent expert to evaluate the Manteca -Lathrop Wastewater Treatment Contract relative to determining contract compliance requirements and proper billing' to the City of Lathrop. B. The Manteca City Council should obtain an Independent Management Audit to review the City's method of contract administration and financial controls. C. The City of Manteca should accelerate the implementation of its "Records Management System". RECOMMENDATIONS: CITY OF LATHROP D. The City of Lathrop should review and adhere to the provisions of the Manteca - Lathrop Wastewater Treatment Contract including preparation of the Annual Five -Year Plan. RECOMMENDATIONS: ALL CITIES E. The City Manager of each City should establish a written policy on Contract Management and Tracking, as part of his Fiscal Management Policies. Elements of that policy should include: a. A central file for Management and Tracking of all contracts. This file should include for each contract IV RECOMMENDATIONS: ALL CITIES continued i. A copy or descriptiotr of the contract and where it is stored ii. Who the contract is %Lith iii. The term (length) of the contract iv. Who, by title or position, administers the contract v. Who, by title or position, can approve changes vi. Other information deemed useful b. A requirement that each contract be read and reviewed at least yearly by the appointed contract administrator. This could be done as part of the Budget Process. c. Establishment of a "tickler system" that would help with meeting the important milestones established in any and all contracts. d. Standardize as many aspects of contracts as possible. RESPONSE REQUIRED Pursuant to Sections 933.0.5 of the Penal code: 1. The City of Manteca for Findings r=1 - #5 and Recommendations "A", `B", and "C" shall report to the Presiding Judge of the San Joaquin County Superior Court, in writing and within 90 days of the publication of this Report. That statute requires that as to each finding in the report, the response indicate one of the following: a. The respondent agrees with the finding. b. The respondent disagrees with the finding with an explanation of the reasons therefore. Section 933.05 also requires as to each recommendation, the response indicate one of the following: a. The recommendation has been implemented, with a summary of the action taken. b. The recommendation leas not yet been implemented, but will be, with a timeframe for implementation. c. The recommendation requires further analysis, with an explanation of the scope of the analysis and a timeframe not to exceed six (6) months. V RESPONSE REQUIRED continued d. The recommendation will not be implemented, with an explanation therefore. 2. The Citv of Lathrop for Findings n6 and 97 and Recommendation "D" shall report to the Presiding Judge of the San Joaquin County Superior Court, in writing and %krithin 90 days of the publication of this Report. That statute requires that as to each findine in the report, the response indicate one of the following: a. The respondent agrees with the finding. b. The respondent disagrees with the finding with an explanation of the reasons therefore. Section 933.05 also requires as to each recommendation, the response indicate one of the following: a. The recommendation has been implemented, with a summary of the action taken. b. The recommendation has not yet been implemented, but will be, with a timeframe for implementation. c. The recommendation requires further analysis, with an explanation of the scope of the analysis and a timeframe not to exceed six (6) months. d. The recommendation will not be implemented, with an explanation therefore. 3. All San Joaquin County Cities (Escalon, Lathrop, Lodi, Manteca, Ripon, Stockton and Tracy) for Findings 48 through ;r15 and Recommendation "E" shall report to the Presiding Judge of the San Joaquin County Superior Court, in writing and vrithin 90 days of the publication of this Report. That statute requires that as to each fading in the report, the response indicate one of the following: a. The respondent agrees with the finding. b. The respondent disagrees with the finding with an explanation of the reasons therefore. Section 933.05 also requires as to each recommendation, the response indicate one of the following: a. The recommendation has been implemented, with a summary of the action taken. V1 RESPONSE REQUIRED continued b. The recommendation has not yet been implemented, biuc will be, with a timeframe for implementation. c. The recommendation requires further analysis, with an explanation of the scope of the analysis and a timeframe not to exceed six (6) months. d. The recommendation will not be implemented, with an explanation therefore. VII