HomeMy WebLinkAbout10-11-2017 Administration Committee Agenda Orange County Sanitation District Wednesday, October 11, 2017
Regular Meeting of fhe 5:00 P.M.
ADMINISTRATION Administration Building
COMMITTEE Board Room
10844 Ellis Avenue
Fountain Valle CA
714 593-7433
AGENDA
CALL TO ORDER:
PLEDGE OF ALLEGIANCE:
DECLARATION OF QUORUM: (Clerk of the Board)
PUBLIC COMMENTS: If you wish to address the Committee on any item, please complete a
Speaker's Form (located at the table outside of the Board Room) and submit it to the Clerk of the Board or
notify the Clerk of the Board the item number on which you want to speak. Speakers will be recognized by
the Chairman and are requested to limit comments to three minutes.
REPORTS: The Committee Chair and the General Manager may present verbal reports on
miscellaneous matters of general interest to the Committee Members. These reports are for information
only and require no action by the Committee.
DEPARTMENT HEAD REPORTS:
CONSENT CALENDAR: The Consent Calendar Items are considered to be routine and will be
enacted, by the Committee, after one motion, without discussion. Any items withdrawn from the Consent
Calendar for separate discussion will be considered in the regular order of business.
1. APPROVAL OF MINUTES (Clerk of the Board)
RECOMMENDATION: Approve Minutes of the September 13, 2017
Administration Committee Meeting.
10/11/2017 Administration Committee Agenda Page 1 of 3
NON-CONSENT:
2. CONTRACTED INTERNAL AUDITS IN SEARCH OF FICTITIOUS EMPLOYEES
AND SEARCH OF FICTITIOUS VENDORS (Lorenzo Tyner)
RECOMMENDATION: Recommend to the Board of Directors to: Receive and file
the August 24, 2017, White Nelson Diehl Evans (WNDE) audit report in Search of
Fictitious Employees and Search of Fictitious Vendors.
3. DOIG DRIVE PROPERTY DISPOSAL - BROKER (Lorenzo Tyner)
RECOMMENDATION: Recommend to the Board of Directors to: Authorize the
General Manager to conduct a Request for Proposal process and subsequently
award for real estate broker services to facilitate the sale of the Orange County
Sanitation District's real property at 7311 Doig Drive, Garden Grove, CA.
INFORMATION ITEMS:
4. STRATEGIC PLAN UPDATE (Bob Ghirelli)
5. ORANGE COUNTY SANITATION DISTRICT PROCUREMENT PROCESS
(Lorenzo Tyner)
CLOSED SESSION:
None.
OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS,
IF ANY:
ADJOURNMENT:
The next Administration Committee meeting is scheduled for Wednesday,
November 8, 2017 at 5:00 p.m.
1 011 112 01 7 Administration Committee Agenda Page 2 of 3
Accommodations for the Disabled: Meeting Rooms are wheelchair accessible. If you require any special disability
related accommodations, please contact the Orange County Sanitation District Clerk of the Board's office at
(714)593-7433 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability
and the type of accommodation requested.
Agenda Postina: In accordance with the requirements of California Government Code Section 54954.2,this agenda
has been posted outside the main gate of the Sanitation District's Administration Building located at 10844 Ellis
Avenue, Fountain Valley, California, not less than 72 hours prior to the meeting date and time above. All public
records relating to each agenda item,including any public records distributed less than 72 hours prior to the meeting
to all,or a majority of the Board of Directors,are available for public inspection in the office of the Clerk of the Board.
Agenda Description: The agenda provides a brief general description of each item of business to be considered or
discussed. The recommended action does not indicate what action will be taken. The Board of Directors may take
any action which is deemed appropriate.
NOTICE TO DIRECTORS: To place items on the agenda for the Committee Meeting, items must be submitted to
the Clerk of the Board 14 days before the meeting.
Kelly A.Lore
Clerk of the Board
(714)593-7433
klore/alocsd.com
For any questions on the agenda, Committee members may contact staff at:
General Manager James Herberg (714)593-7300 iherberofdocsd.com
Assistant General Manager Bob Ghirelli (714)593-7400 rohirellildocsd.00m
Director of Finance and Lorenzo Tyner (714)593-7550 Itvnerfdoasd.com
Administrative Services
Director of Human Resources Celia Chandler 714 593-7202 cchandler ocsd.com
10/11/2017 Administration Committee Agenda Page 3 of 3
ITEM NO. 1
MINUTES OF THE
ADMINISTRATION COMMITTEE
Orange County Sanitation District
Wednesday, September 13, 2017 at 5:00 P.M.
A regular meeting of the Administration Committee of the Orange County Sanitation
District was called to order by Board Chair Sebourn on September 13, 2017 at 5:02 p.m.
in the Administration Building of the Orange County Sanitation District. Director Kim led
the Flag Salute.
A quorum was declared present at 5:10 p.m., as follows:
COMMITTEE MEMBERS PRESENT: STAFF PRESENT:
Donald P. Wagner, Vice-Chair Jim Herberg, General Manager
Jim Ferryman Bob Ghirelli, Assistant General Manager
Peter Kim Celia Chandler, Director of Human Resources
Mark Murphy (Alternate) Rob Thompson, Director of Engineering
Steve Nagel Lorenzo Tyner, Director of Finance &
Scott Peotter Administrative Services
Erik Peterson (Alternate) Roya Sohanaki, Engineering Manager
Greg Seboum, Board Chair Tina Knapp, Deputy Clerk of the Board
David Shawver, Board Vice-Chair Janine Aguilar
Jennifer Cabral
COMMITTEE MEMBERS ABSENT: Al Garcia
Chad Wanks, Chair Mark Kawamoto
Al Krippner Randall Kleinman
Glenn Parker Laurie Klinger
Sal Tinajero Laura Maravilla
Kathy Millea
Jeff Mohr
Andrew Nau
Man Nguyen
Ddaze Phuong
Merrill Seiler
Richard Spencer
John Swindler
OTHERS PRESENT:
Brad Hogin, General Counsel
Karen Delaney, Alliant
Laurinda Newell, Alliant
PUBLIC COMMENTS:
None.
0 9/1 312 01 7 Administration Committee Minutes Page 1 &5
REPORT OF COMMITTEE CHAIR:
Board Chair Sebourn did not provide a report.
REPORT OF GENERAL MANAGER:
General Manager Jim Herberg provided information regarding a letter received from the
City of Anaheim's Successor Agency to the Anaheim Redevelopment Agency. He stated
that a request for a new appointment be made to the Anaheim Oversight Board to fill the
vacancy of Gail Eastman who represents the Orange County Sanitation District. A copy
of the letter and a current list of the 13 Redevelopment Agency Oversight Boards were
distributed to the Committee Members and made available to the public. Mr. Herberg
stated that at the September 271h Board of Directors meeting, an item will be presented
to appoint the new member to the Anaheim board, and to reaffirm the currently listed
appointments to the remaining 12 boards unless any Director provides an alternative
recommendation.
REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES:
Director of Finance and Administrative Services Lorenzo Tyner did not provide a report.
Due to a lack of quorum, Board Chair Sebourn reordered the agenda to begin with
Information Item No. 6.
INFORMATION ITEMS:
6. URBAN RUNOFF PROGRAM (Jim Colston)
Mark Kawamoto, Engineering Supervisor, introduced Merrill Seiler, Principal
Environmental Specialist, who manages the urban runoff program. Mr. Kawamoto
provided an informative PowerPoint presentation that included an overview of how
the OCSD Urban Runoff Diversion Program works and background of Program,
OCSD's partners, diversion locations, dry weather urban runoff quality, and impact
of urban runoff. Mr. Kawamoto and Mr. Seiler answered questions from the
Committee.
Director Nagel arrived at 5:10 p.m., thereby establishing quorum.
Vice-Chair Wagner arrived at 5:17 p.m.
CONSENT CALENDAR:
1. APPROVAL OF MINUTES (Clerk of the Board)
MOVED, SECONDED, AND DULY CARRIED TO: Approve Minutes of the
July 12, 2017 Administration Committee Meeting.
09/13/2017 Administration Committee Minutes Page 2 of 5
AYES: Ferryman, Kim, Nagel, Peotter, Peterson (Alternate), Sebourn,
Shawver, and Wagner
NOES: None
ABSTENTIONS: None
ABSENT: Krippner, M. Murphy (Alternate), Parker, Tinajero, and Wanke
2. REIMBURSEMENTS TO BOARD MEMBERS AND STAFF (Lorenzo Tyner)
MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of
Directors to: Receive and file report of reimbursements to Board Members and
Staff per Government Code Section 53065.5 for the period of July 1, 2016 through
June 30, 2017.
AYES: Ferryman, Kim, Nagel, Peotter, Peterson (Alternate), Sebourn,
Shawver, and Wagner
NOES: None
ABSTENTIONS: None
ABSENT: Krippner, M. Murphy (Alternate), Parker, Tinajero, and Wanke
3. CONTINUITY OF OPERATIONS PLAN CONSULTING AND SOFTWARE
(Celia Chandler)
MOVED, SECONDED, AND DULY CARRIED TO:
A. Approve a Professional Services Agreement with BOLDplanning Inc. for
consulting services and Continuity of Operations Management Software
under GSA Contract GS35FO301Y or its successor, for an amount not to
exceed $118,000; and
B. Approve a contingency amount of$11,800 (10%).
AYES: Ferryman, Kim, Nagel, Peotter, Peterson (Alternate), Sebourn,
Shawver, and Wagner
NOES: None
ABSTENTIONS: None
ABSENT: Krippner, M. Murphy (Alternate), Parker, Tinajero, and Wanks
NON-CONSENT:
4. CINTAS FIRE PROTECTION (SAFETY TRAINING) (Celia Chandler)
Director of Human Resources Celia Chandler introduced Human Resources
Manager Richard Spencer who provided an overview of this item. Mr. Herberg
and Mr. Spencer responded to questions from the Committee pertaining to the
training offered and an explanation as to why this is an unanticipated expense.
Director Mark Murphy arrived at 5:20 p.m.
09/13/2017 Administration Committee Minutes Page 3 of 5
MOVED. SECONDED, AND DULY CARRIED TO:
A. Ratify a change order to P.O. 105830-013, U.S. Communities contract
number 12-JLH-011C, issued to Cintas Fire Protection, for safety training
for an additional $30,000 for a contract amount not to exceed $129,000 for
the period from October 1, 2016 to June 30, 2017; and
B. Add funding to P.O. 105963-013, U.S. Communities contract number
12-JLH-011C, issued to Cintas Fire Protection, for safety training for an
additional $30,000 for a contract amount not to exceed $129,000 for the
period from July 1, 2017 to June 30, 2018.
AYES: Ferryman, Kim, M. Murphy (Alternate), Nagel, Peotter,
Peterson (Alternate), Seboum, Shawver, and Wagner
NOES: None
ABSTENTIONS: None
ABSENT: Krippner, Parker, Tinajero, and Wanke
INFORMATION ITEMS:
5. BENEFITS PROGRAM UPDATE (Celia Chandler)
Director of Human Resources Celia Chandler provided an informative PowerPoint
presentation that included an overview of the cost of employee benefits,
compliance requirements, organizational sustainability components of offering
benefits, language in the labor agreements regarding employee benefits and cost
sharing, an overview of benefit plans offered, and a comparison of average
benefits costs. Ms. Chandler introduced Karen Delaney and Laurinda Newell, both
with Alliant, who continued the presentation with information pertaining to benefit
plan pricing, renewals and timing, current benefit trends, and the importance of
investing in talent at OCSD. Ms. Chandler indicated that proof of the eligibility of
dependents is required annually or when changes are made. Ms. Chandler
confirmed the monthly cost of employee benefits. The Committee inquired as to
benchmarking between public agencies and the private sector and asked that this
information be provided in the future. Ms. Delaney responded to a question
regarding health savings accounts.
7. SPACE UTILIZATION NEEDS (Rob Thompson)
Director of Engineering Rob Thompson provided a PowerPoint presentation
pertaining to this item, which included information regarding OCSD's need for
space for future processing needs. Mr. Thompson's presentation included an
overview of current and recently completed construction projects, future
construction needs, immediate space challenges, and long-term space issues.
The Committee indicated that phasing by square footage would be helpful in
reviewing this subject in the future. Mr. Thompson indicated that OCSD believes
capacity needs are projected to be met through 2040.
09/13/2017 Administration Committee Minutes Page 4 of 5
CLOSED SESSION:
CONVENED IN CLOSED SESSION PURSUANT TO GOVERNMENT CODE
SECTIONS 54956.8:
The Committee convened in closed session at 6:09 p.m. to discuss two items.
Confidential minutes of the Closed Session have been prepared in accordance with the
above Government Code Section and are maintained by the Clerk of the Board in the
Official Book of Confidential Minutes of Board and Committee Closed Session Meetings.
Director Nagel recused himself at 6:09 p.m. and left the meeting during discussion on
Closed Session Item No. 1. Director Nagel returned to the meeting at 6:12 p.m. for the
discussion on Closed Session Item No. 2.
RECONVENED IN REGULAR SESSION:
The Board reconvened in regular session at 6:15 p.m.
CONSIDERATION OF ACTION, IF ANY, ON MATTERS CONSIDERED IN CLOSED
SESSION:
General Counsel Brad Hogin stated there was nothing to report.
OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS,
IF ANY:
Board Vice-Chair Shawver indicated that he recently attended the California Association
of Sanitation Agencies annual conference (focus on Proposition 218 notification,
biosolids, and public-private partnerships) and would be happy to share his conference
materials with anyone interested.
ADJOURNMENT:
Committee Vice-Chair Wagner declared the meeting adjourned at 6:17 p.m. to the next
regularly scheduled meeting of Wednesday, October 11, 2017 at 5:00 p.m.
Submitted by:
Tina Knapp, CMC
Deputy Clerk of the Board
09/13/2017 Administration Committee Minutes Page 5 of 5
ADMINISTRATION COMMITTEE Meeting Date Told dDir.
to/u/v to/zs/v
AGENDA REPORT Item Number Iem Number
z
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: CONTRACTED INTERNAL AUDITS IN SEARCH OF FICTITIOUS
EMPLOYEES AND SEARCH OF FICTITIOUS VENDORS
GENERAL MANAGER'S RECOMMENDATION
Receive and file the August 24, 2017, White Nelson Diehl Evans (WNDE) audit report in
Search of Fictitious Employees and Search of Fictitious Vendors.
BACKGROUND
At the direction of the Administration Committee's Audit Oversight Subcommittee, White
Nelson Diehl Evans (WNDE), Certified Public Accountants and the Orange County
Sanitation District's (Sanitation District) contracted internal auditors, were engaged to
apply agreed-upon procedures in Search of Fictitious Employees and Search of Fictitious
Vendors.
Attached are the Accountant Reports from WNDE on these two agreed-upon procedure
reviews. Also attached are staff's responses to the auditors findings and
recommendations pertaining to this review.
In summary on the Search for Fictitious Employees, of the 15 procedures performed by
WNDE, there were no exceptions noted on 13 of these procedures. Of the remaining two
procedures, WNDE noted two separate findings. Upon review of these findings with the
Audit Oversight Committee, it was concluded by the Committee that:
• Maintaining copies of identifying documents to support the Employment Eligibility
Verification Form (Form 1-9) is not federally mandated, but a procedure that was
adopted by the Sanitation District a few years back for new employees going
forward. Personnel employed prior to the implementation of this procedure would
not have these identifying documents in their personnel file; and
• The one exception where a retired employee's personnel file did not contain a
signed Form 1-9 was because the employee's initial hire on date was in 1985, one
year prior to the Employee Eligibility Verification mandate.
In summary on the Search for Fictitious Vendors, of the 14 procedures performed by
WNDE, there were no exceptions noted on 11 of these procedures. Of the remaining
three procedures, WNDE noted three separate findings. Upon review of these findings
with the Audit Oversight Committee, it was concluded by the Committee that:
Page 1 of 2
• There were legitimate reasons why some vendors were included in the Vendor
Master File (VMF) multiple times (legally filed address vs. mailing address,
different parcel numbers receiving sewer rebates with the same address, etc.),
but that the 60 duplicate VMF uncovered by the auditors during their test work
should be reviewed by staff to determine if any of these duplicates can be
deactivated;
• The Sanitation District should review all VFM to ensure that a Request for
Taxpayer Identification Number (Form W-9) is on file as a result of the 18
instances where WNDE discovered that the Form W-9 was not on file. The W-9
was not a formally documented procedure by the Sanitation District until around
2012, and no effort was made to secure this form for existing vendors; and
• That staff implement procedures to secure the approval authorization for all
disbursements as one out of 34 cash disbursements tested did not have the
required Controller approval.
Overall, the Committee concluded that no fictitious employees or vendors had been
uncovered by agreed-upon procedures performed by WNDE.
RELEVANT STANDARDS
• Internal Auditing —Approx. 3 per year
ATTACHMENT
The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website
(www.ocsd.coml with the complete agenda package:
• Staff Report to Ad Hoc Audit Committee, 'Responses to Agreed-Upon Procedures
Report to Search for Fictitious Employees'
• "Agreed Upon Procedures Review — Fictitious Employee Analysis" report from
WNDE
• Staff Report to Ad Hoc Audit Committee, "Responses to Agreed-Upon Procedures
Report to Search for Fictitious Vendors"
• "Agreed Upon Procedures Review—Fictitious Vendor Analysis"report from WNDE
Page 2 of 2
C� p
C1
August 24, 2017
STAFF REPORT
TO: Ad Hoc Audit Committee
FROM: Michael D. White, Controller
SUBJECT: Responses to Agreed-Upon Procedures Report to Search for Fictitious
Employees
On August 24, 2017, White Nelson Diehl Evans (WNDE) issued their report on
procedures they performed in their search for fictitious employees. Below is a listing of
the auditors' findings contained within their report along with staff responses.
Internal Controls
1. Procedure Performed: The District provided narratives and/or interviews
regarding how the Employee Master File (EMF) is maintained.
Results: Only the Human Resources Department can enter new employees,
remove employees, and make employee information changes, including the pay
rate. The Payroll Department is responsible for processing payroll and cannot
change employee information in the EMF. The functions of making changes to the
EMF and processing payroll are segregated. No exceptions were noted as a result
of the procedures performed.
Staff Response: N/A
2. Procedure Performed: The auditors received the EMF file as of March 13, 2017,
and tested it against the District's policies and procedures.
Results: No exceptions were noted as a result of this testing.
Staff Response: N/A
OCSD ♦ P.0.Box8127 ♦ Fountain Valley,CA 92728-8127 ♦ (714)%2-2411
Response to Contracted Internal Auditors Report on Search for Fictitious Employees
August 24, 2017
Page 2 of 6
3. Procedure Performed: The IT Manager responsible for providing the EMF in
procedure #2 above signed a representation that in the compilation or
transmission of the EMF, all electronic data provided is as originally recorded in
the District's system and was not altered for purposes of this agreed-upon
procedure.
Results: The representation letter was signed by the Principal Information
Technology Analyst who provided the EMF. No exceptions were noted as a result
of this testing.
Staff Response: N/A
Analysis of EMF
1. Procedure Performed: The auditors reviewed the EMF for any duplicate
employee names and/or addresses.
Results: The auditors performed this procedure and utilized the results to select
the samples for procedure #3 below within this "Analysis of EMF" section.
Staff Response: N/A
2. Procedure Performed: The auditors reviewed the EMF for any partial duplication
of employee names and/or addresses (such as variations of employee names
included in the EMF and the same street name, but different house/apartment
number).
Results: The auditors performed this procedure and utilized the results to select
the samples for procedure #3 below within this "Analysis of EMF" section.
Staff Response: N/A
3. Procedure Performed: Since there should be no duplicates within the EMF
itself, the auditors selected all exact or partial matches identified in procedures
#1 and #2 above for testing. The auditors reviewed the personnel files to verify a
W-4 (IRS form for determining the correct federal income tax withholding), 1-9
(Employment Eligibility Verification), and other identifying documents (driver's
license, etc.) and to note the pay rate in effect over the 21-month period. They
then reviewed the history of payments made over the 21-month period for
reasonableness in relation to the pay rate.
Response to Contracted Internal Auditors Report on Search for Fictitious Employees
August 24, 2017
Page 3 of 6
Results: The auditors identified 39 partial matches when comparing the
information within the EMF mostly due to similar addresses and selected them
for testing. The majority of the matches occurred due to living on the same street
and same city; however, there was a different street address or apartment
number.
For 38 out of the total 39 employees tested, the auditors inspected the signed 1-9
that was signed by the human resources personnel who indicated that they
inspected the proper identifying documents. However, they were unable to
inspect other identifying documents, such as a driver's license, on 13 of these
personnel files since copies were not retained.
For 1 employee out of the total 39 employees tested, the auditors were unable to
inspect the signed form 1-9 or other identifying documents, such as a driver's
license, since the employee had retired in October 2016 and the documents were
not available.
Staff Response: OCSD is required to verify federally accepted documentation
establishing identify and employment authorization and have an Human
Resource representative annotate the valid document, sign, and date. However,
there is no federal mandate that copies of the verifying documentation be
maintained. Several years back, Human Resources began the practice of
including copies of the documentation along with the 1-9 in the personnel file.
The auditor's sample of the entire workforce included personnel files prior to
when the District's internal practice required copies of the documentation.
In response to the 1 employee who had retired in October 2016, this employee
was originally hired in 1985, one year prior to the mandate of Employment
Eligibility Verification and the required completion and filing of Form 1-9.
4. Procedure Performed: The District provided a list of new employees hired
during the 21-month period.
Results: The auditors received this listing and utilized the information to select
the sample as noted in procedure #6 below and tested in procedure#7 below
within this "New Employee" section.
Staff Response: N/A
5. Procedure Performed: The Human Resources Department is responsible for
entering new employees, making employee changes, including pay rates, and
removing employees. The Payroll Department is responsible for processing
payroll and cannot change employee information. The list of new employees was
Response to Contracted Internal Auditors Report on Search for Fictitious Employees
August 24, 2017
Page 4 of 6
provided to both the Human Resources and Payroll Departments to verify the
existence of the employees. The employee in charge of each department signed
a representation that the new employee listing contained actual employees
and/or noted any discrepancies.
Results: The auditors received signed representation letters from both the
Human Resources Assistant and the Finance Director. No discrepancies were
noted.
Staff Response: N/A
6. Procedure Performed: A sample of 25 employees was randomly selected from
the listing obtained in procedure#4 above.
Results: The auditors selected the sample and tested the items in procedure #7
below within this "New Employee' section.
Staff Response: N/A
7. Procedure Performed: The auditors reviewed the following for the employees
selected in procedure #6 above: the personnel files to verify a W-4 and other
identifying documents (driver's license, etc.) were retained.
Results: No exceptions were noted as a result of this testing.
Staff Response: N/A
8. Procedure Performed: The District provided a list of employees with pay rate
changes during the 21-month period.
Results: The auditors received this listing and utilized the information to select the
sample as noted in procedure#10 below and tested in procedure#11 below within
the "Change in Pay Rates" section.
Staff Response: N/A
9. Procedure Performed: The District provided the payroll policy surrounding
required signatures/approvals on personnel action forms for pay rate changes.
Results: Pay rate changes due to promotions or a change in position require a
personnel action form (PAF). The payroll system automatically routes the PAF to
the appropriate employee for approval, which will be a supervisor, manager, or
department head of the employee's division. Cost of living increases are included
in salary schedules containing the position title, step, and hourly rate, which are
Response to Contracted Internal Auditors Report on Search for Fictitious Employees
August 24, 2017
Page 5 of 6
approved by the Board of Directors. Cost of living increases do not require a PAF
and are entered into the system by the Human Resources Department based on
the approved salary schedules.
Staff Response: N/A
10.Procedure Performed: A sample of 25 employees was randomly selected from
the listing obtained in procedure #8 above, with 15 specifically selected as the
largest pay rate changes and 10 randomly selected.
Results: The auditors selected the sample and tested the items in procedure #11
below within this "Change in Pay Rates" section.
Staff Response: N/A
11.Procedure Performed: The auditors performed the following for the employees
selected in procedure #10 above:
a. reviewed the personnel files to verify a W-4 and other identifying documents
(driver's license, etc.) were retained.
b. compared the new pay rate from procedure #8 above with the PAF in the
employee's personnel file to verify the propriety of the rate change.
c. verified the PAF was approved by the appropriate supervisor in accordance
with District policy noted in procedure #9 above.
Results: For all 25 employees tested, the auditors inspected the employment
eligibility verification form, 1-9, that was signed by the human resources personnel
indicating that they inspected the proper identifying documents. However, for 3 of
these employees, they were unable to inspect other identifying documents, such
as a driver's license, since copies were not retained in the personnel files.
Staff Response: Same result and staff response to "Analysis of EMF— Procedure
Performed No. 3" above.
12.Procedure Performed: The District provided a listing of employees and the
number of paychecks issued for July 1, 2015 through June 30, 2016. Normally, an
employee should have only 26 paychecks for one full fiscal year; however, annual
rate adjustments occur through a separate check; therefore, the existence of 27
paychecks for one fiscal year would be reasonable. The auditors reviewed the
number of paychecks issued per employee and investigated employees who have
received in excess of 27 paychecks.
Results: The auditors originally noted 105 employees with more than 27
paychecks; however, the District requested the population be sampled. The
Response to Contracted Internal Auditors Report on Search for Fictitious Employees
August 24, 2017
Page 6 of 6
auditors selected 25 employees for testing and found the reason for paychecks in
excess of 27 were as follows:
• Additional payouts for compensated absences, such as vacation, sick,
bereavement, and comp time
• Retroactive pay for rate changes
• Tuition reimbursements
Staff Response: It is staff's opinion that the above three circumstances are
legitimate reasons for issuing checks in excess of 27 to any one employee during
the year and were appropriately authorized by Human Resources and Financial
Management.
Staff Overall Response: No fictitious employees were uncovered in this agreed-
upon engagement.
ORANGE COUNTY SANITATION DISTRICT
AGREED-UPON PROCEDURES REVIEW
FICTITIOUS EMPLOYEE ANALYSIS
FOR THE 21-MONTH PERIOD OF
JULY 1,2015 TO MARCH 31, 2017
INDEPENDENT ACCOUNTANTS' REPORT ON
APPLYING AGREED-UPON PROCEDURES
Board of Directors
Orange County Sanitation District
Fountain Valley, California
We have performed the procedures set forth in this report, which were agreed to by the management of
the Orange County Sanitation District, Fountain Valley, California (the District), for the 21-month
period of July 1, 2015 to March 31, 2017. The District's management is responsible for establishing
and maintaining internal controls over payroll to ensure there are no fictitious employees. The
sufficiency of these procedures is solely the responsibility of the management of the District.
Consequently,we make no representations regarding the sufficiency of the procedures described below
either for the purpose for which this report has been requested or for any other purpose.
The procedures performed and the results of those procedures are as follows:
Interual Controls
1. The District provided narratives and/or interviews regarding how the Employee Master File (EMF)
is maintained. The narrative and/or interviews included:
a. What data fields are maintained for each employee.
b. What procedures are used to set up a new employee.
c. What personnel are authorized to set up a new employee.
d. Identified employees who have access to the EMF and also have authority to input data for
purposes of issuing payroll checks.
e. Identified the Information Technology (IT) employees that have access to the EMF and/or
have the ability to make additions,deletions or changes to the EMF.
f. Determined if any high-level officials obtain a periodic report of new employees added to
the EMF.
Results:
a. The EMF included the following data fields:
• Employee ID
• Preferred and legal first name, middle name/initial, and last name
• Benefit group
• Bargaining group
• Department
• Division number and name
• Pay status,whether active or retired,and pay frequency
• Title(classification)
• Current mailing address
- 1 -
2875 Michelle Drive,Suite 300,Irvine,CA 92606 •Tel: 714.978.1300• Fax:714.978.7893
Offices located in Orange and San Diego Counties
Internal Controls (Continued)
1. (Continued)
Results (Continued):
b. Only the Human Resources Department can enter new employees, remove employees, and
make employee information changes, including the pay rate. The Human Resources
Department requests the necessary information from the new employee including a signed
employment eligibility verification form, I-9.
c. Only the Human Resources Department can set up a new employee.
d. The Payroll Department has access to the EMF and can input data for issuing payroll checks.
However, the Payroll Department cannot make changes to the EMF; therefore, this does not
cause an issue for segregation of duties.
e. The IT Department has access to the EMF,but cannot make changes.
I. High-level officials do not obtain a periodic report of new employees added to the EMF;
however, given the District's other controls, we do not see a need to add this procedure.
Overall.:
Only the Human Resources Department can enter new employees, remove employees, and make
employee information changes, including the pay rate. The Payroll Department is responsible for
processing payroll and cannot change employee information in the EMF. The functions of making
changes to the EMF and processing payroll are segregated.
2. The District provided the EMF as of March 13,2017.
Results: We received the EMF file. No exceptions were noted as a result of this testing.
3. The IT Manager responsible for providing the EMF in procedure #2 above signed a representation
that in the compilation or transmission of the EMF, all electronic data provided is as originally
recorded in the District's system and was not altered for purposes of this agreed-upon procedure.
Results: The representation letter was signed by the Principal Information Technology Analyst
who provided the EMF. No exceptions were noted as a result of this testing.
Analysis of EMF
1. We reviewed the EMF for any duplicate employee names and/or addresses.
Results: We performed this procedure and utilized the results to select the samples for procedure
#3 below within this "Analysis of EMF"section.
-2 -
Analysis of EMF (Continued)
2. We reviewed the EMF for any partial duplication of employee names and/or addresses (such as
variations of employee names included in the EMF and the same street time, but different
house/apartment number).
Results: We performed this procedure and utilized the results to select the samples for procedure
#3 below within this "Analysis of EMF"section.
3. Since there should be no duplicates within the EMF itself, we selected all exact or partial matches
identified in procedures#1 and#2 above for testing.
a. We reviewed the personnel files to verify a W-4 (IRS form for determining the correct
federal income tax withholding), I-9 (Employment Eligibility Verification), and other
identifying documents(driver's license, etc.)were retained and to note the pay rate in effect
for the 21-month period.
b. We reviewed the history of payments made over the 21-month period for reasonableness in
relation to the pay rate noted in procedure#3a above.
Results: We identified 39 partial matches when comparing the information within the EMF mostly
due to similar addresses and selected them for testing. The majority of the matches
occurred due to living on the same street and same city; however, there was a different
street address or apartment number.
For 38 out of the total 39 employees tested, we inspected the signed I-9 that was signed
by the human resources personnel who indicated that they inspected the proper
identifying documents. However, we were unable to inspect other identifying documents,
such as a driver's license, on 13 of these personnel files since copies were not retained.
For 1 employee out of the total 39 employees tested, we were unable to inspect the signed
form I-9 or other identifying documents, such as a driver's license, since the employee
had retired in October 2016 and the documents were not available.
There were no other issues noted during this testing.
New Employees
4. The District provided a list of new employees hired during the 21-month period.
Results: We received this listing and utilized the information to select the sample as noted in
procedure #6 below and tested in procedure #7 below within this "New Employee"
section.
5. The Human Resources Department is responsible for entering new employees, making employee
changes, including pay rates, and removing employees. The Payroll Department is responsible for
processing payroll and cannot change employee information. The list of new employees was
provided to both the Human Resources and Payroll Departments to verify the existence of the
employees. The employee in charge of each department signed a representation that the new
employee listing contained actual employees and/or noted any discrepancies.
Results: We received signed representation letters from both the Human Resources Assistant and
the Finance Director.No discrepancies were noted.
-3 -
New Emulovees (Continued)
6. A sample of 25 employees was randomly selected from the listing obtained in procedure#4 above.
Results: We selected the sample and tested the items in procedure #7 below within this "New
Employee"section.
7. We reviewed the following for the employees selected in procedure 46 above:
a. We reviewed the personnel files to verify a W4 and other identifying documents (driver's
license, etc.)were retained.
Results: No exceptions were noted as a result of this testing.
Chan¢e in Pay Rates
8. The District provided a list of employees with pay rate changes during the 21-month period.
Results: We received this listing and utilized the information to select the sample as noted in
procedure #10 below and tested in procedure #11 below within this "Change in Pay
Rates" section.
9. The District provided the payroll policy surrounding required signatures/approvals on personnel
action forms for pay rate changes.
Results: Pay rate changes due to promotions or a change in position require a Personnel Action
Form (PAF). The payroll system automatically routes the PAF to the appropriate
employee for approval, which will be a supervisor, manager, or department head of the
employee's division. Cost of living increases are included in salary schedules containing
the position title, step, and hourly rate, which we approved by the Board of Directors.
Cost of living increases do not require a PAF and are entered into the system by the
Human Resources Department based on the approved salary schedules.
10. A sample of 25 employees was randomly selected from the listing obtained in procedure #8 above,
with 15 specifically selected as the largest pay rate changes and 10 randomly selected.
Results: We selected the sample and tested the items in procedure #11 below within this "Change
in Pay Rates" section.
11. We reviewed the following for the employees selected in procedure 410 above:
a. We reviewed the personnel files to verify a W4 and other identifying documents (driver's
license, etc.)were retained.
b. We compared the new pay rate from procedure #8 above with the PAF in the employee's
personnel file to verify the propriety of the rate change.
c. We verified the PAF was approved by the appropriate supervisor in accordance with
District policy noted in procedure#9 above.
-4-
Chance in Pay Rates(Continued)
11. (Continued)
Results: For all 25 employees tested, we inspected the employment eligibility verification form,
1-9, that was signed by the human resources personnel indicating that they inspected the
proper identifying documents. However, for 3 of these employees, we were unable to
inspect other identifying documents, such as a driver's license, since copies were not
retained in the personnel files.
There were no other issues noted during this testing.
Excess Paychecks
12. The District provided a listing of employees and the number of paychecks issued for July 1, 2015
through June 30, 2016. Normally, an employee should have only 26 paychecks for one full fiscal
year; however, annual rate adjustments occur through a separate check; therefore, the existence of
27 paychecks for one fiscal yew would be reasonable. We reviewed the number of paychecks
issued per employee and investigated employees who have received in excess of 27 paychecks.
Results: We originally noted 105 employees with more than 27 paychecks; however, the District
requested the population be sampled. We selected 25 employees for testing and found the
reason for paychecks in excess of 27 were as follows:
• Additional payouts for compensated absences, such as vacation, sick, bereavement,
and comp time
• Retroactive pay for rate changes
• Tuition reimbursements
Disclaimer
This agreed-upon procedures engagement was conducted in accordance with attestation standards
established by the American Institute of Certified Public Accountants. We were not engaged to and did
not conduct an examination or review, the objective of which would be the expression of an opinion or
conclusion,respectively, on the existence of fictitious employees. Accordingly,we do not express such
an opinion or conclusion. Had we performed additional procedures, other matters might have come to
our attention that would have been reported to you. However, no fictitious employees were uncovered
in this agreed-upon procedures engagement.
Restriction on the Use of This Report
This report is intended solely for the information and use of the Orange County Sanitation District
Board of Directors and management of the District, and is not intended to be, and should not be, used
by anyone other than those specified parties.
4�� ,/QLI&eaoXaJ !LP
Irvine, California
August 24, 2017
- 5 -
C� p
C1
August 24, 2017
STAFF REPORT
TO: Ad Hoc Audit Committee
FROM: Michael D. White, Controller
SUBJECT: Responses to Agreed-Upon Procedures Report to Search for Fictitious
Vendors
On August 24, 2017, White Nelson Diehl Evans (WNDE) issued their report on
procedures they performed in their search for fictitious vendors. Below is a listing of the
auditors' findings contained within their report along with staff responses.
Internal Controls
1. Procedure Performed: The District provided narratives and/or interviews
regarding how the Vendor Master File (VMF) is maintained.
Results: Only the Purchasing Department can make changes to the VMF and
add new vendors. The Accounts Payable Department and non-purchasing
department employees (such as the General Manager, Purchasing Manager,
Department Directors, Division Managers, Supervisors, and other District staff)are
responsible for approving purchases. The functions of making changes to the VMF
and approving purchases are segregated.
Staff Response: N/A
2. Procedure Performed: The District provided the VMF and a listing of District
employees, including employee addresses, the Employee Master File (EMF), as
of March 13, 2017.
Results: No exceptions were noted as a result of this testing.
Staff Response: N/A
OCSD ♦ P.O.Box8127 ♦ Fountain Valley,CA 92728-8127 ♦ (714)%2-2411
Response to Contracted Internal Auditors Report on Search for Fictitious Vendors
August 24, 2017
Page 2 of 6
3. Procedure Performed: The IT Manager responsible for providing the VMF and
EMF in procedure#2 above signed a representation that in the compilation or
transmission of the VMF and EMF, all electronic data provided was as originally
recorded in the District's system and was not altered for purposes of this agreed-
upon procedure.
Results: The representation letter was signed by the Principal Information
Technology Analyst who provided the VMF and EMF. No exceptions were noted
as a result of this testing.
Staff Response: N/A
Test for Possible Matches between Vendors and Emolovees
1. Procedure Performed: The auditors compared the names and addresses of the
vendors in the VMF with the names and addresses of employees in the EMF.
Results: The auditors performed this procedure and utilized the results to select
the samples for the procedures under "Exact Matches" section and "Partial
Matches" section below.
Staff Response: N/A
Exact Matches
2. Procedure Performed: Exact matches between the VMF and EMF can be due
to travel or other reimbursement requests by employees that are paid outside of
the payroll system. The auditors provided the listing of exact matches to the District
and requested a history of payments made (outside of payroll) for the 21-month
period. They utilized the payment history to identify 15 employees with the largest
aggregates payments made outside of payroll. From the remainder of the exact
matches identified, a random sample of 10 was selected.
Results: The auditors provided the matches noted from procedure #1 ("Test for
Possible Matches between Vendors and Employees" section) above and
received the history of payments for the 21-month period from the District. They
utilized the history of payments to make the sample selection for procedures #3
and #4 below within this "Exact Matches" section.
Response to Contracted Internal Auditors Report on Search for Fictitious Vendors
August 24, 2017
Page 3 of 6
In addition, during their review of the VMF, the auditors noted some vendors that
are listed multiple times. The vendors had the same address and, in some cases,
the same tax identification number. The auditors recommend the District review
the VMF and remove the vendors that are listed more than once without different
addresses. The vendors noted are included in `Attachment A".
Staff Response: In some instances, vendors are legitimately listed multiple times
due to the need for the separation of a supplier's legally filed address with the
Internal Revenue Service (as identified on their W-9 and used for Form 1099
reporting) and the mailing address used for payments. There are also instances
where payments are for rebates to sewer customers where the same customer
has various accounts that are tied to specific parcels or permit numbers. The
parcel numbers are different but the mailing address may be the same. In other
circumstances, it may appear that vendors are listed multiple times when actually
all but one of the duplicates have been deactivated within the financial information
system because of obsolescence. Deleting obsolete files is not a viable option
due to the possible loss of transaction history. District staff will review the vendor
listed in Attachment A to determine if any of the vendor duplicates can be
deactivated.
3. Procedure Performed: For those 25 employees selected in procedure #2
above, the auditors selected a sample from the payment history to test to verify
the propriety of the payment. In selecting the sample of individual transactions,
they followed the American Institute of Certified Public Accountants (AICPA)
sample size guidance with a maximum sample size per employee of 25
transactions.
Results: The auditors selected the sample and tested the items selected in
procedure #4 below within this "Exact Matches" section.
Staff Response: N/A
4. Procedure Performed: To verify the propriety of the payments selected in
procedure #3 above, the auditors performed the following:
a. The District provided procurement policies and procedures indicating the
type and amount of approvals required.
b. The auditors ensured the reimbursement request or invoice was approved
in accordance with District policy noted in procedure #4a above.
c. The auditors determined the payment was for goods and/or services that
are reasonable given the District's business.
d. In the case of vendors selected that are not employees, the auditors
verified the District has a W-9 on file.
Response to Contracted Internal Auditors Report on Search for Fictitious Vendors
August 24, 2017
Page 4 of 6
Results: The rash disbursements selected for testing were approved in
accordance with the District's policies, were reasonable given the District's
business, and had a W-9 on file, if applicable. No exceptions were noted as a
result of this testing.
Staff Response: N/A
Partial Matches
5. Procedure Performed: The auditors determined the number of employees and
vendor names and/or addresses that have partial matches, provided the listing of
partial matches to the District, and requested a history of payments made
(outside of payroll)for the 21-month period. They then selected a sample based
on the AICPA sample size guidance with a maximum sample size of 25. The
sample selection was split with 60% of the sample selection focusing on the
largest aggregate payments by vendor and 40% of the sample randomly
selected.
Results: The auditors provided the matches noted from procedure#1 ("Test for
Possible Matches between Vendors and Employees" section) above and
received the history of payments for the 21-month period from the District. They
utilized the history of payments to make the sample selection for procedures #6
and #7 below within this "Partial Matches" section.
Staff Response: N/A
6. Procedure Performed: For those matches selected in procedure #5 above, the
auditors selected a sample from the payment history to test to verify the propriety
of the payment. In selecting the sample of individual transactions, they followed
the AICPA sample size guidance with a maximum sample size per employee of
25 transactions.
Results: The auditors selected the sample and tested the items selected in
procedure #7 below within this "Partial Matches" section.
Staff Response: N/A
7. Procedure Performed: To verify the propriety of the payments selected in
procedure #6 above, the auditors performed the following:
a. The District provided procurement policies and procedures indicating the
type and amount of approvals required.
b. The auditors ensured the reimbursement request or invoice was approved
in accordance with District policy noted in procedure #6a above.
Response to Contracted Internal Auditors Report on Search for Fictitious Vendors
August 24, 2017
Page 5 of 6
c. The auditors determined the payment was for goods and/or services that
are reasonable given the District's business.
d. In the case of vendors selected that are not employees, the auditors
verified the District had a W-9 on file.
Results: The cash disbursements selected for testing were approved in
accordance with the District's policies and were reasonable given the District's
business with the exception of one transaction noted in the second paragraph
below. Out of the 11 vendors selected for testing, 5 did not have a W-9 on file.
The District did not have a W-9 on file because the vendor was set up a long time
ago in the system. The W-9 was not a formally documented or consistently
followed procedural step by Purchasing to obtain and append a W-9 for newly
created Vendor files until the estimated timeframe of 2012. We recommend the
District ensures that all vendors in the VMF have a W-9 on file.
Out of 34 cash disbursements selected for testing, one did not have the required
approval. This disbursement was a rebate to a District customer in the net
amount of$17,226.25. This customer paid fees based on estimated usage and,
at year-end, the District calculated the customer fees based on actual usage. In
this case, the customer was owed a rebate. The District's policy is that all credits
or rebates to customers should be reviewed and approved by the Controller. We
did not note the Controller's initials on the customer refund. We recommend the
District ensure the required approvals are obtained prior to paying customer
refunds.
Staff Response: The District agrees with the recommendation to ensure that all
vendors in the VMF have a W-9 on file. Information Technology (IT) will (1)
deactivate any VMFs that have not had any transactional activity over the last
two fiscal years and (2) generate a report identifying all remaining active VMFs
that do not have W-9's attached. From this report generated by IT, Purchasing
will obtain the missing W-9 documents and scan them into the active VMFs. The
goal is to complete this recommendation by March 31, 2018.
In reference to the lack of approval on a customer refund by the Controller, the
District will include a line on the Batch Control Sheet, the approval document for
the payment of rebates, requiring the Controller's signature approval.
8. Procedure Performed: The District provided a list of all new vendors added
during the 21- month period.
Results: The District provided the listing of all new vendors added during the 21-
month period.
Staff Response: N/A
Response to Contracted Internal Auditors Report on Search for Fictitious Vendors
August 24, 2017
Page 6 of 6
9. Procedure Performed: The District distributed the list of new vendors to the
appropriate personnel who reviewed the list and confirmed that new vendors
added to the list were valid.
Results: The listing was provided to the Contracts/Purchasing Assistant and the
Purchasing Supervisor who signed a representation letter that, to the best of their
knowledge, the new vendors consisted of valid vendors utilized by the District for
appropriate District daily operations.
Staff Response: N/A
Review of P.O. Boxes
10.Procedure Performed: The auditors identified vendors in the VMF with P.O.
Boxes as addresses and selected a sample of 25.
Results: The auditors identified the vendors in the VMF that had P.O. Boxes as
addresses and selected a sample for the procedure #11 below within this "Review
of P.O. Boxes" section.
Staff Response: N/A
11.Procedure Performed: The auditors verified the authenticity of the vendor by
performing the following procedures:
a. Reviewed the form W-9 the District has on file.
b. Accessed the vendor websites and/or called the vendor to verify existence.
Results: The auditors were able to verify the existence of all vendors with online
websites. For 13 of the 25 vendors selected, they were not able to inspect the W-
9. The District did not have a W-9 on file because the vendor was set up a long
time ago in the system. The W-9 was not a formally documented or consistently
followed procedural step by Purchasing to obtain and append a W-9 for newly
created Vendor files until the estimated timeframe of 2012. The auditors
recommend the District ensures that all vendors in the VMF have a W-9 on file.
Staff Response: This is the same recommendation as stated in "Partial Matches
— Procedure Performed No. 7" and OCSD's response is the same.
Staff Overall Response: No fictitious vendors were uncovered in this agreed-
upon engagement.
ORANGE COUNTY SANITATION DISTRICT
AGREED-UPON PROCEDURES REVIEW
FICTITIOUS VENDOR ANALYSIS
FOR THE 21-MONTH PERIOD OF
JULY 1,2015 TO MARCH 31, 2017
INDEPENDENT ACCOUNTANTS' REPORT ON
APPLYING AGREED-UPON PROCEDURES
Board of Directors
Orange County Sanitation District
Fountain Valley, California
We have performed the procedures set forth in this report, which were agreed to by the management of
the Orange County Sanitation District, Fountain Valley, California (the District), for the 21-month
period of July 1, 2015 to March 31, 2017. The District's management is responsible for establishing
and maintaining internal controls over cash disbursements to ensure there are no fictitious vendors.
The sufficiency of these procedures is solely the responsibility of the management of the District.
Consequently, we make no representations regarding the sufficiency of the procedures described below
either for the purpose for which this report has been requested or for any other purpose.
The procedures performed and the results of those procedures are as follows:
Intemal Controls
1. The District provided narratives and/or interviews regarding how the Vendor Master File (VMF) is
maintained. The narrative and/or interviews included:
a. What data fields are maintained for each vendor.
b. What procedures are used to set up a new vendor.
c. What personnel are authorized to set up a new vendor.
d. Identified employees who have access to the VMF and also have authority to approve
invoices,purchase orders, or receiving documents.
e. Identified the Information Technology (IT) employees that have access to the VMF and/or
have the ability to make additions,deletions, or changes to the VMF.
f. Determined if any high-level officials obtain a periodic report of new vendors added to the
VMF.
g. If the District makes "manual" or "emergency" payments to vendors that do not go through
the regular approval and review procedures, identified personnel responsible for verifying
that the vendor has been approved and added to the VMF.
Results:
a. The VMF included the following data fields:
• Vendor name
• Type of vendor(vendor versus employee)
• Address, city, state, and zip code
• Tax Identification Number
• Type of company: C (corporation),N (any other type), P (individual/sole proprietor), and E
(exempt)
• Business phone(can add fax number,but is not mandatory)
• Email (not mandatory)
- 1 -
2875 Michelle Drive,Suite 300,Irvine,CA 92606 •Tel: 714.978.1300• Fax:714.978.7893
Offinr located in Orange and San Diego Counties
Internal Controls (Continued)
1. (Continued)
Results (Continued):
b. New vendors are entered into the system by the Purchasing Department. A W-9 must be
scanned into the system as support for the existence of the new vendor. Also the tax
identification number (TIN) must be entered into the system. By entering in the TIN number,
the District can verify that the vendor does not already exist in the system to avoid duplicate
entries.
c. Only the Purchasing Department can make changes to the VMF and add new vendors.
d. The Accounts Payable Department has access to the VMF and can approve invoices. However,
the Accounts Payable Department cannot make changes to the VMF; therefore, this does not
cause an issue for segregation of duties.
e. The IT Department has access to the VMF,but cannot make changes.
f. High-level officials do not obtain a periodic report of new vendors added to the VMF; however,
given the District's other controls, we do not see a need to add this procedure. Per our
discussion with the finance department, the District does not believe a benefit exists for this
control as they could not think of any new vendor being added that would raise a red flag.
g. If a "manual" or "emergency" payment to a vendor requires setup in the VMF then the only
difference from the procedure noted in "b" above is that a W-9 is not required. The W-9 will
be obtained at a later date due to the emergency situation.
Overall.:
Only the Purchasing Department can make changes to the VMF and add new vendors. The
Accounts Payable Department and non-purchasing department employees (such as the General
Manager, Purchasing Manager, Department Directors, Division Managers, Supervisors, and other
District staff) are responsible for approving purchases. The functions of making changes to the
VMF and approving purchases are segregated.
2. The District provided the VMF and a listing of District employees, including employee addresses,
the Employee Master File(EMF),as of March 13, 2017.
Results: We received the VMF and EMF files.No exceptions were noted as a result of this testing.
3. The IT Manager responsible for providing the VMF and EMF in procedure #2 above signed a
representation that in the compilation or transmission of the VMF and EMF, all electronic data
provided was as originally recorded in the District's system and was not altered for purposes of this
agreed-upon procedure.
Results: The representation letter was signed by the Principal Information Technology Analyst
who provided the VMF and EMF.No exceptions were noted as a result of this testing.
-2 -
Test for Possible Matches between Vendors and Employees
1. We compared the names and addresses of the vendors in the VMF with the names and addresses of
employees in the EMF.
a. We searched for exact matches of names and addresses.
b. We searched for partial matches (such as variations of employee names included in the
VMF and the same street name,but different house/apartment number).
Results: We performed this procedure and utilized the results to select the samples for the
procedures under"Exact Matches" section and`Partial Matches"section below.
Exact Matches
2. Exact matches between the VMF and EMF can be due to travel or other reimbursement requests by
employees that are paid outside of the payroll system. We provided the listing of exact matches to
the District and requested a history of payments made (outside of payroll) for the 21-month period.
We utilized the payment history to identify 15 employees with the largest aggregates payments
made outside of payroll. From the remainder of the exact matches identified, a random sample of
10 was selected.
Results: We provided the matches noted from procedure #1 ("Test for Possible Matches between
Vendors and Employees" section) above and received the history of payments for the
21-month period from the District. We utilized the history of payments to make the
sample selection for procedures#3 and#4 below within this "Exact Matches"section.
In addition, during our review of the VMF,we noted some vendors that are listed multiple
times. The vendors had the same address and, in some cases, the same tax identification
number. We recommend the District review the VMF and remove the vendors that are
listed more than once without different addresses. The vendors noted are included in
"Attachment A".
3. For those 25 employees selected in procedure 42 above, we selected a sample from the payment
history to test to verify the propriety of the payment. In selecting the sample of individual
transactions, we followed the American Institute of Certified Public Accountants (AICPA) sample
size guidance with a maximum sample size per employee of 25 transactions.
Results: We selected the sample and tested the items selected in procedure #4 below within this
"Exact Matches" section.
4. To verify the propriety of the payments selected in procedure #3 above, the following was
performed:
a. The District provided procurement policies and procedures indicating the type and amount
of approvals required.
b. We ensured the reimbursement request or invoice was approved in accordance with District
policy noted in procedure#4a above.
c. We determined the payment was for goods and/or services that are reasonable given the
District's business.
d. In the case of vendors selected that are not employees, we verified the District has a W-9 on
file.
-3 -
Exact Matches (Continued)
4. (Continued)
Results: The cash disbursements selected for testing were approved in accordance with the
District's policies,were reasonable given the District's business, and had a W-9 on file, if
applicable. No exceptions were noted as a result of this testing.
Partial Matches
5. We determined the number of employees and vendor names and/or addresses that have partial
matches. We provided the listing of partial matches to the District and requested a history of
payments made (outside of payroll) for the 21-month period. We selected a sample based on the
AICPA sample size guidance with a maximum sample size of 25. The sample selection was split
with 60% of the sample selection focusing on the largest aggregate payments by vendor and 40%
of the sample randomly selected.
Results: We provided the matches noted from procedure #1 (`Test for Possible Matches between
Vendors and Employees" section) above and received the history of payments for the
21-month period from the District. We utilized the history of payments to make the
sample selection for procedures#6 and 47 below within this `Partial Matches" section.
6. For those matches selected in procedure #5 above, we selected a sample from the payment history
to test to verify the propriety of the payment. In selecting the sample of individual transactions, we
followed the AICPA sample size guidance with a maximum sample size per employee of 25
transactions.
Results: We selected the sample and tested the items selected in procedure #7 below within this
"Partial Matches"section.
7. To verify the propriety of the payments selected in procedure #6 above, the following was
performed:
a. The District provided procurement policies and procedures indicating the type and amount
of approvals required.
b. We ensured the reimbursement request or invoice was approved in accordance with District
policy noted in procedure#6a above.
c. We determined the payment was for goods and/or services that are reasonable given the
District's business.
d. In the case of vendors selected that are not employees, we verified the District had a W-9
on file.
Results: The cash disbursements selected for testing were approved in accordance with the
District's policies and were reasonable given the District's business with the exception of
one transaction noted in the second paragraph below. Out of the 11 vendors selected for
testing, 5 did not have a W-9 on file. The District did not have a W-9 on file because the
vendor was set up a long time ago in the system. The W-9 was not a formally documented
or consistently followed procedural step by Purchasing to obtain and append a W-9 for
newly created Vendor files until the estimated timeframe of 2012. We recommend the
District ensures that all vendors in the VMF have a W-9 on file.
-4-
Partial Matches(Continued)
7. (Continued)
Out of 34 cash disbursements selected for testing, one did not have the required approval.
This disbursement was a rebate to a District customer in the net amount of$17,226.25.
This customer paid fees based on estimated usage and, at year-end, the District calculated
the customer fees based on actual usage. In this case, the customer was owed a rebate.
The District's policy is that all credits or rebates to customers should be reviewed and
approved by the Controller. We did not note the Controller's initials on the customer
refund. We recommend the District ensure the required approvals we obtained prior to
paying customer refunds.
Analvzine New Vendors
8. The District provided a list of all new vendors added during the 21-month period.
Results: The District provided the listing of all new vendors added during the 21-month period.
9. The District distributed the list of new vendors to the appropriate personnel who reviewed the list
and confirmed that new vendors added to the list were valid.
Results: The listing was provided to the Contracts/Purchasing Assistant and the Purchasing
Supervisor who signed a representation letter that, to the best of their knowledge, the new
vendors consisted of valid vendors utilized by the District for appropriate District daily
operations.
Review of P.O. Boxes
10. We identified vendors in the VMF with P.O. Boxes as addresses and selected a sample of 25.
Results: We identified the vendors in the VMF that had P.O. Boxes as addresses and selected a
sample for the procedure#11 below within this "Review of P.O. Boxes"section.
11. We verified the authenticity of the vendor by performing the following procedures:
a. Reviewed the form W-9 the District has on file.
b. Accessed the vendor websites and/or called the vendor to verify existence.
Results: We were able to verify the existence of all vendors with online websites. For 13 of the
25 vendors selected,we were not able to inspect the W-9. The District did not have a W-9
on file because the vendor was set up a long time ago in the system. The W-9 was not a
formally documented or consistently followed procedural step by Purchasing to obtain
and append a W-9 for newly created Vendor files until the estimated timeframe of 2012.
We recommend the District ensures that all vendors in the VMF have a W-9 on file.
- 5 -
Disclaimer
This agreed-upon procedures engagement was conducted in accordance with attestation standards
established by the American Institute of Certified Public Accountants. We were not engaged to and did
not conduct an examination or review, the objective of which would be the expression of an opinion or
conclusion,respectively, on the existence of fictitious vendors.Accordingly, we do not express such an
opinion or conclusion. Had we performed additional procedures, other matters might have come to our
attention that would have been reported to you. However, no fictitious vendors were uncovered in this
agreed-upon procedures engagement.
Restriction on the Use of This Report
This report is intended solely for the information and use of the Orange County Sanitation District
Board of Directors and management of the District, and is not intended to be, and should not be, used
by anyone other than those specified parties.
A)A" i Aw-z" /1P
Irvine, California
August 24, 2017
-6 -
ORANGE COUNTY SANITATION DISTRICT
AGREED-UPON PROCEDURES REVIEW
FICTITIOUS VENDOR ANALYSIS
FOR THE 21-MONTH PERIOD OF JULY 1, 2015 TO MARCH 31,2017
ATTACHMENT A
SECTION: EXACT MATCHES
PROCEDURE#2
The following vendors were listed multiple times within the VMF:
The Bank of New York Mellon
Arms,International Inc
City of Fullerton
East Orange County Water District
Biorem Environmental Inc
Aecom Technical Services Inc
Alfa Laval Ashbrook Simon-Hartley Inc
American Chemical Society
American General Life Insurance Company
Associated Vacuum Services
AT&T Teleconference Services
Battery Systems Inc
Benshaw,Inc (Regal)
Calcoast(California Coastal Commission)
Carollo Engineers Corporate Office
City of Buena Park
City of Los Alamitos
City of Stanton
City of Tustin
City of Westminster
Cortech Engineering
City of Brea
City of Yorba Linda
Dancing Coyote Environmental
Dartco Transmission Sales & Service
Employment Development Dept-Cashier
Eppendorf North America Inc
First American Title Company
Institute of Business Publications
ORANGE COUNTY SANITATION DISTRICT
AGREED-UPON PROCEDURES REVIEW
FICTITIOUS VENDOR ANALYSIS
FOR THE 21-MONTH PERIOD OF JULY 1, 2015 TO MARCH 31,2017
ATTACHMENT A(CONTINUED)
SECTION: EXACT MATCHES
PROCEDURE#2
JP Morgan Chase Bank,NA
Lehigh Outfitters,LLC
Liberty Pipeline Services
Linde Electronics Specialty Gases
MSC Industrial Supply Co
OFS Brands Holdings Inc
Opfiv Security Inc
Orange County Vector Control District
Parkson Corporation
Pine Environmental Services LLC
Powercom
Quincy Compressor
R.F. Macdonald Co
Red Wing Shoe Store
SCPLRC - Souther California Public
Southland Claims Svc Inc
T and D Communications Inc
TCH Associates/Princeton Case West
USAA United Services Automobile Assoc
Vaughan's Industrial Repair
Wastewater Solids Management Co
Willdan
Umpqua Bank
Bonerts Inc
South Coast Circuits
Wateruse Association
Gallade Chemical Inc
Stratus Environmental Inc
National Water Research Institute
International Paper
GRM Information Management Services
ADMINISTRATION COMMITTEE Meeting Date TOBd.Of Dir.
io/up1 io/zs/v
AGENDA REPORT emNumber Item Number
3
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: DOIG DRIVE PROPERTY DISPOSAL— BROKER
GENERAL MANAGER'S RECOMMENDATION
Authorize the General Manager to conduct a Request for Proposal process and
subsequently award for real estate broker services to facilitate the sale of the Orange
County Sanitation District's real property at 7311 Doig Drive, Garden Grove, CA.
BACKGROUND
In 2005, the Orange County Sanitation District (Sanitation District) purchased the building
located at 7311 Doig Drive in Garden Grove to be used as a Collections Department field
office and corporate yard. However, as a result of local sewer transfers primarily in Tustin
and unincorporated areas of Orange County, it was later determined that the new facility
was no longer necessary and the building was declared surplus property. A decision was
made to lease the building out. The building is currently under a lease with a
manufacturing firm that guarantees extensions until 2022.
The building was constructed in 1978 per seismic codes less stringent than currently
required. A Seismic Risk Assessment was performed and structural reinforcements were
recommended to meet current seismic standards.
The Board determined that the associated expenses related to repair of the building were
cost prohibitive and directed staff to dispose of the property.
RELEVANT STANDARDS
Ensure the public's money is wisely spent
PROBLEM
The Sanitation District does not engage in many real estate transactions. As such, it does
not maintain in-house real estate resources or expertise.
PROPOSED SOLUTION
Dispose of this asset through sale through engagement with a real estate broker for this
transaction.
Page 1 of 2
TIMING CONCERNS
The ownership and management of this property is not necessary and represents a
distraction from Sanitation District core business.
RAMIFICATIONS OF NOT TAKING ACTION
N/A
PRIOR COMMITTEE/BOARD ACTIONS
March 2017 - Board of Directors approved disposition of property at 7311 Doig Drive be
referred to the Administration Committee.
November 2016 -Approved the Second Amendment to the Doig Property Lease to enter
into an eight-month lease extension of the Sanitation District's real property at 7311 Doig
Drive, in a form approved by General Counsel.
July 2016 - Board of Directors approved First Amendment to extend the lease by three
months at 7311 Doig Drive.
December 2011 - Board of Directors authorized the lease at 7311 Doig Drive.
November 2010 - Board of Directors declared the property at 7311 Doig Drive as surplus
property.
ADDITIONAL INFORMATION
At its March 22, 2017 meeting, the Board approved the designation of Sanitation District
property at 7311 Doig Drive as surplus and referred the item to the Administration
Committee for disposition. Staff recommends engaging a broker to facilitate the sale of
the property.
FINANCIAL CONSIDERATIONS
The proceeds of this asset disposal may be used to offset other property acquisitions by
the Sanitation District.
ATTACHMENT
The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.corn with the
complete agenda package:
N/A
Page 2 d 2
ADMINISTRATION COMMITTEE Meeting Date To ad.of Dir.
io nw -
AGENDA REPORT IWm Number Item Number
a -
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Robert P. Ghirelli, Assistant General Manager
SUBJECT: STRATEGIC PLAN UPDATE
GENERAL MANAGER'S RECOMMENDATION
Information Only.
BACKGROUND
In November 2013, the Orange County Sanitation District (Sanitation District) Board of
Directors adopted the 2014-2019 Five-Year Strategic Plan. Each year, staff undertakes
a review and update of the Strategic Plan to make any necessary changes. In April, staff
began the 2017 update process.
In April, the firm of BHI Management Consulting (consultant) was retained to conduct a
series of one-on-one confidential interviews with interested board members. In July, the
consultant led a Strategic Planning Workshop for employees and participated in the
Executive Management Team's annual planning meeting in August. Information gathered
during these meetings was used to prepare this Strategic Plan Update.
RELEVANT STANDARDS
Strategic Plan
PRIOR COMMITTEE/BOARD ACTIONS
November 2013 - Adopted the 2014-2019 Five-Year Strategic Plan.
ADDITIONAL INFORMATION
Based on the outcome of the Strategic Plan Update Interviews and Employee Workshop,
several minor modifications were made to the Levels of Service and seven of the eight
strategic goals are deemed complete:
Completed Strategic Goals:
• Disinfection of Ocean Discharge—develop an implementation plan associated with
cessation of disinfection of the ocean discharge.
• Legislative Advocacy and Public Outreach—Develop a unified legislative advocacy
and public outreach program.
Page 1 of 2
• Odor Control — Completion of the Odor Control Master Plan.
• Future Biosolids Management Options — Study biosolids management options,
including third-party contracts and onsite capital facilities.
• Energy Efficiency — Research new energy efficiency and energy conversion
technologies.
• Local Sewer Transfers—Complete the transfer of 174 miles of local sewers serving
parts of Tustin and unincorporated areas north of Tustin and local sewer transfers
in the City of Santa Ana.
• Future Water Recycling—Determine partnerships, needs, strategies, benefits, and
costs associated with recycling of Plant No. 2 effluent water.
The eighth goal, Workforce Planning and Workforce Development, is continuing into the
final year of the 5-year strategic plan. As part of our comprehensive workforce planning
and development efforts, the General Manager's 2017-2018 work plan calls for a staffing
study that identifies required staffing levels and opportunities to improve organizational
efficiency and effectiveness.
Staff is proposing to make changes to some of the Levels of Service contained in the
Strategic Plan. These changes are highlighted in the attached red-line version of the
strategic plan. The changes are intended to clarify the meaning of a service level, delete
outdated service levels, and eliminate irrelevant service levels.
CEQA
N/A
FINANCIAL CONSIDERATIONS
N/A
ATTACHMENT
The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website
(www.ocsd.coml with the complete agenda package:
Redline Version of Draft Strategic Plan Document (provided in hard copy as separate
document)
Page 2 of 2
UPDATEDRAFr
December 2017
�-7� .*N
r
y
ti M. e
t; d
5
f:
year strategic klan
ORANGE COUNTY SANITATION DISTRICT
ORANGE COUNTY SANITATION DISTRICT
five-year strategic plan
DECEMBER 2017
ANI A
�i
g 2
a '
N THE tl Q
a
4�
• 1
I
i�
`v
table of contents ■
OCSD Board of Directors...........................................................................................ii
Message from the General Manager..........................................................................iu
ExecutiveSummary.......................................................................................................1
tegic Planning Framework.............................................................................2
Statement.........................................................................................................3
Is�on tatement............................................................................................................4
CoreValues.....................................................................................................................5
RiskRegister....................................................................................................................6
Strategic Goals and Levels of Service.........................................................................7
ORANGE COUNTY SANITATION DISTRICT-S YEAR STRATEGIC PLAN(DECEMBER 2017)
board of directors
The strategic planning effort starts with the Board of Directors setting overall policy and priorities for the
Sanitation District.Based on that policy direction,staff develops the annual operational plan and budget.
Anaheim La Palma
Denise Barnes Peter Kim
Brea Los Alamitos
Glenn Parker Richard Murphy
Buena Park Member of the Board of Supervisors
Fred Smith Michelle Steel
Costa Mesa Sanitary District Midway City Sanitary District
James M. Ferryman Al Kfippner
Cypress Newport Beach
Mariellen Yatc Scott Peotter
Fountain Valley Orange
Steve Nagel Teresa Smith
Fullerton Placentia
Greg Seboum Chad Wanke
(Board Chair) Santa Ana
Garden Grove Sal Tinajem
Steve Jones Seal Beach
Huntington Beach Ellery Deaton
Barbara Delgleize Stanton
Irvine David Shawver
Donald P.Wagner Tustin
Allan Bernstein
Irvine Ranch Water District
John Withers Villa Park
La Habra Robert Collacott
Tun Shaw Yorba Linda Water District
Phil Hawkins
ORANGECOUNTY SANITATION DISTRICT-5Y 45iRAiE11110P (DECEMBER 20171
message from the general manager
tmd
ember 2013 the Orange County Sanitation District(OCSD)
d a 5-Year Strategic Plan that envisioned an organizational
that adheres to our core values and makes efficient and
e use of all available resources.The Strategic Plan centered
forts on customer service, fiscal responsibility, protecting
health and the environment, communication, partnering
thers and creating the best possible workforce. We
tied to the execution of that plan and implementation of the
als necessary to achieve success.
Protecting publironment are critical to our mission, and I am pleased to
report that our ocean monitoring program reflects that our ocean is healthy around OCSD's
ocean outfall.We also continue to be fiscally strong.This year OCSD received AAA bond ratings
and we have reduced our long term pension liabilities,which in rum enabled us to reduce planned
rate increases by 35 percent over the next three years.
Four years into the five year Strategic Plan, I am pleased to report that we have completed seven
of the original strategic goals and made strides towards accomplishing the final goal.In this update
year,we held Board member interviews,an employee workshop,and updated our Risk Register.
We remain committed to sustaining and improving our performance and meeting all of the
established strategic goals.
Under the direction of the Board of Directors,I am honored to be leading this effort and I look
forward to working together to accomplish our goals in the years ahead and contin our
successes. Ir
The accomplishments laid out in this Strategic Plan update would not be possible without the
collective dedication and effort of our workforce and the commitment a�d support of our Board
of Directors and The public we serve.
Respectfully submitted,
12 &
James D. Herberg,General Manager
ORANGECOUNTY SANITATION DISTRICT—SPEAR STRATEGIC PLAN(DECEMBER 2017)
executive summary
The 2014—2019 5 year Strategic Plan is a guiding document that provides a framework that directs our
work. Each year,the Strategic Plan will be reassessed,updated, and submitted for approval by the Board
of Directors.
This year's Strategic Plan Update began with consultant retained by OCSD conducting confidential Board
Interviews with interested Board members to identify issues of concerns. Next, the consultant led a
Strategic Planning Workshop for employees and attended the Executive Management Team's annual
retreat to provide feedback from the Board members and employees.
will. e Update concluded with t five Strategic
Goals being identified as completed, no new goals being adopted, and a few minor modifications being
made to OCSD's levels of service.
Comp/eted Strategic Goa/a
Disinfection of Ocean Discharge—Develop an implementation plan including the technical,financial,
and societal factors associated with cessation of disinfection of the ocean disc
Legislative Advocacy and Public Outreach—Develop a unified legislative adv7includmig
outreach program.
Odor Control—Completion of the Odor Control Master Plan.
Future Biosolids Management Options—Study biosolids management optionspartycontracts and onsite capital facilities.
Energy Efficiency—Continue to research new energy efficiency and energy conversonecnologies.
Local Sewer Transfers — Complete the transfer of 174 miles of local sewers serving parts of Tustin and
unincorporated areas north of Tustin and local sewer transfers in the City of Santa Ana.
Future Water Recycling — Determine partnerships, needs, strategies, benefits, and costs associated with
recycling of Plant No.2 effluent water.
$hategiC Goals is Progress.
1. Workforce Planning and Workforce Development—This initiative is ongoing and part of a comprehensive
workforce planning and development effort to ensure we have the right people with the right skills and
abilities,in the right place,at the right time.
ORANGE CWNTY SANITATION DISTRICT-SYSM SYMTMIC PLAN(DECEMBER 2017)
strategic planning framework
The planning framework illustrated below shows how OCSD staff and the Board of Directors play a critical
role in strategic planning and resource allocation.
Monitoring Strategic New or Altered
and Evaluation Planning evels of
Board strategic (:9)
Approval of
Budget planning
process
Budget ,o Goals and
Operational \objectives
Planning
_3
L
ORANGECOUNTY SANITATION DISTRICT-SPEAR STRATEGIC PLAN(DECEMBER 2017)
our mission
The Nlission Statement is the basic fo,andation that defines wlay we exist.
"To protect pub/ic hea/th
and the environment by
providing effective
wastewater co/%ction,
treatment, and
recyc/ing"
1 1..
p3
vision statement
The Vision Statement supports the Mission Statement by expressing a broad philosophy of what the
Orange County Sanitation District strives to achieve in the delivery of services tour customers,vendors,
other agencies,the general public,and each other.
ORANGE COUNTY SANITATION DISTRICT
WILL BE A LEADER IN:
• Providing reliable, responsive, and
affordable services in line with
customer needs and expectations.
• Protecting public health and the
environment utilizing all practical
and effective means for wastewater,
energy and solids resource recovery.
• Continually seeking efficiencies to
ensure that the public's money is
wisely spent.
• Communicating our mission and
strategies with those we serve and
all other stakeholders.
• Partnering with others to benefit our
customers, this region, and our
industry.
• Creating the best possible workforce
in terms of safety, productivity,
customer service, and training.
ORANGECOUNTY SANITATION DISTRICT-6 YEAR STRATEGIC PLAN IDECEMBER 20171
philosophycore values
The Core Values support the NEssion and Vision Statements by expressing die values,beliefs,and
that guide our daily actions.7bey help form the framework of our organization and reinforce our
professional work ethic.
We aspire to the highest degree of integrity,honesty,trust,
and respect in our interaction with each other,our suppliers,
our customers,and our community.
We strive to reach OCSD goals through cooperative efforts
and collaboration with each other and our cons6tuenues.
We work to solve problems in a aeadve,cost-effective and
safe manner,and we acknowledge team and individual efforts.
We lead by example,acknowledging the value of our
resources and using them wisely and safely to achieve
our objectives and goals.We axe committed to act
in the best interest of our employees,our organi>ation,
and our community.
We continuously develop ourselves,enhancing our talents,
skills,and abilities,knowing that only through personal
growth and development will we continue
to progress as an agency and as individuals.
We seek to recognize,acknowledge,and xewazd
contributions to OCSD by our many talented employees.
p5
risk register 2017
The Risk Register is a periodic compilation of the various risks facing the Orange County Sanitation District,
as seen and determined by our management team. As the world dealt with a variety of critical events last year
(a number of terrorist incidents in Europe,high rainfalls in Southern California,a massive sewage leak offshore
from Los eles, an extensive natural gas leak north of Los Angeles), OCSD management identified risks
directly r to our infrastructure and ongoing services.Management agreed that our biggest risks Are cyber
terrorist er attacks,earthquakes with their associated impacts,and threats to maintenance of assets.
The 201 Isk Register Update Identified these as the top risks:
• Earthquake and liquefaction impact facilities and operations—Southern California is prone to
earthquakes, and some areas of Orange County may include areas subject to liquefaction.
• Poor maintenance of assets leads to safety and reliability issues—Concerns about sufficient
staffing of Maintenance personnel might lead to threats with regards to the assets.
• Cyber or hacker attack on OCSD—Cyber-attacks can potentially prevent servers and regular
work from continuing normally—OCSD operations now depend on continued computer and
server function,which could be at risk from cyber-attacks.
The major continuity challenges Include:
• Lack of business continuity exercises leads to unpreparedness—OCSD conducts
emergency preparedness exercises, but alight need to do more in regard to business continuity.
Engineering staff are putting new engineering measures into effect to reduce the chance of damage
to buildings from earthquakes, while Risk Management has purchased earthquake insurance
on additional key structures. The Operations department is adding staff to the Maintenance
function. Regarding cyber-attacks, OCSD's Information Technology a'l) Division has added
personnel who specialize in IT security. Risk Management will be asking the Board to approve
a contract with a business continuity consultant to move forward an integrated business continuity
effort for all OCSD divisions including IT.
ORANGE COJNTV SANITATION DGTRICT—SVEMWUMIeIC PLAN(DECEMBER 2017)
strategic goals and levels of service
OCSD has six outstanding strategic goals to support the vision of the Board of Directors and Executive
Management Team. The levels of service are key performance indicators in achieving the overall vision.
ProvldingExoeptlonal Customer SeMae
• Providing reliable,responsive,and affordable services in line with customer needs and expectations.
1. Control-Completion of the Odor Control Master Plan to make sure the Districes investment is
current and,if needed,future process systems to produce the benefits intended.
Targetfor completion in FY 15-16.
Providing Exceptional Customer Service
Odor complaint call response: Treatment plants within 1 hour. 100%
Odor complaint call response: Collection system within 1 working day. 100%
Number of odor complaints events: (Under normal operating conditions) 0
• Reclamation Plant No. 1 0
• Treatment Plant No. 2 12
• Collection System
Respond to public complaints or inquiries regarding construction projects within 1 100%
day.
guh RnJ
Respond to all biosolids contractor violations within a week of violation notice. 100%
PrOt6ah7gPahllC Health and the Environment
• Protecting public health and the environment utilizing all practical and effective means for wastewater,
energy,and solids resource recovery.
2. Future Biosolids Management Options - Study biosolids management opt s including third-patty
contracts and onsite capital facilities for mid-term and long-term approaches 2016-2017.
Tagetfor romble#on in FY 15-16.
3. Energy Efficiency-The District will research new energy efficiency and energy conversion
technologies to maximize energy of 6ency,reduce operating costs,mmunize environmental impact,
and replace assets that are at the end of their useful lives. Targetfor completion in FY 17-18.
ocsD owns antl operates$6.24illlon in Infiasbueture a55e[5.Through these assets OCSD wliWs,veers,andeinrer reuses orsafoy discharges 210
mll0onga11onspardayofwa m.ter.
ORANGECOUNTY SANITATION DISTRICT—STEAR 1111IIATEa1C PLAN IDECEMBER 2017)
strategic goals and levels of service
Protecting Public Health& The Environme Level of
Service Target
Accept dry weather runoff diversion flows without imposing fees. Up to 10 mgd
Air emissions health risk to community and employees, per one million people < SO
(for each plant).
Notices of violation (NOV) with air, land, and water permits. 0
Respond to collection system spills within 1 hour. 100%
Sanitary sewer spills per 100 miles. <2.1
Contain sanitary sewer spills within 5 hours. 100%
BOO
Meet secondary treatment standards. TSS 25 mg/L
SS 30 mg/L
Thirty-day geometric mean of coliform bacteria in effluent after initial dilution of <1000
250:1 (MPN).
Frequency of unplanned use of emergency one-mile outfall (per year during dry 0
weather).
Compliance with Core Industrial pretreatment requirements. 100%
Msnsgfng&ndProtectfngthe Public's Funds
• Continually seeking efficiencies to ensure that the public's money is wisely spent.
4. Local Sewer Transfers-Complete transfer of 174 miles of local sewers serving parts of Tustin and
unincorporated areas north of Tustin and local sewer transfers in the City of Santa Ana to be
concluded by December 31,2013.Following those,no further local sewers to be transferred at the
initiation of CCSD.If a local jurisdiction is interested in CICSD transferring sewers,each request
will be considered on an individual basis assuming the sewers meet the requirements identified.
Tmget/orsomplehon in FY 13-14.
Managing and Protecting Public Funds evel of
Service Target
Annual user fees sufficient to cover all O&M requirements. 100%
Actual collection,treatment, and disposal costs per million gallons. <within 30%of budget
Maintain AAA Bond Rating. Maintain
ORANGE CGJNTV SANITATION DGTRICT-SVEM 57MTnIC PWI(DECEMBER 2017)
strategic goals and levels of service
Stakeholder UndeimWad/ngand Sappoit
• Communicating our mission and strategies with those we serve and all other stakeholders.
• Parmering with others to benefit our customers,this region,and our industry.
5. Future Water Recycling Options-Determine partnerships,needs,strategies,benefits,and costs
associated with recycling of Plant No. 2 effluent water. Target forcornpk6on in FY 18-19.
Stakeholder Understanding and Support Level of
Service Target
Meet GWRS specification requirements for Plant No. 1 secondary effluent. 5 NTU
Provide specification effluent available to the Groundwater Replenishment 100%
System to maximize production of purified water.
0rgan1Z9WW01Ef VdVenesa
• Creating the best possible workforce in terms of safety,productivity,customer service,and training.
6. Workforce Planning and Workforce Development-This initiative is ongoing and pan of a
comprehensive workforce planning and development effort to ensure we have the tight people with
the right skills and abilities,in the right place,at the right time. Target for completion, ongoing.
Organizational Effectiveness
Employee injury incident rate—per 100 employees.
Industry
Average
Meet mandatory OSHA training requirements. >95%
Achieve annual agency target of days away from work, days of restricted work <2 5
activity, or job transferred as a result of a work-related injury or illness.
Training hours per employee. 45 per year
ORANGECOUNTY SANITATION DISTRICT-5Y RSTRATEGIC PUN DECEMBER 2017)
.a y
Reclamation Plant No.1 (Administration Offices)
10844 Ellis Avenue • Fountain Valley,California 92708 714.962.2411
Treatment Plant No.2
22212 Brookhurst Street • Huntington Beach,California 92646
w .ocsewers.wm
a, N
mxwwo„
ADMINISTRATION COMMITTEE Meeting Date To ad.of Dir.
,0,117
AGENDA REPORT Itern Number tern Number
s
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: ORANGE COUNTY SANITATION DISTRICT PROCUREMENT PROCESS
GENERAL MANAGER'S RECOMMENDATION
Information Only.
BACKGROUND
Each month, staff provides an informational presentation on topics of interest to the Board
of Directors. This month's topic: Orange County Sanitation District's Procurement
Process, Bids vs. RFPs, Sole Source Contracts vs. Competitive Contracts, and other
related topics.
RELEVANT STANDARDS
• Maintain a proactive asset management program
• Protection of Orange County Sanitation District assets
• Ensure the public's money is wisely spent
• Consider life-cycle costs in all decisions
ATTACHMENT
The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.com) with the
complete agenda package:
N/A
Page 1 of 1
ORANGE COUNTY SANITATION DISTRICT
Agenda
Terminology
Glossary
Glossary of Terms and Abbreviations
AQMD Air Quality Management District
ASCE American Society of Civil Engineers
BOD Biochemical Oxygen Demand
CARS California Air Resources Board
CASA California Association of Sanitation Agencies
CCTV Closed Circuit Television
CEQA California Environmental Quality Act
CIP Capital Improvement Program
CRWQCB California Regional Water Quality Control Board
CWA Clean Water Act
CWEA California Water Environment Association
EIR Environmental Impact Report
EMT Executive Management Team
EPA US Environmental Protection Agency
FOG Fats, Oils, and Grease
gpd gallons per day
GWRS Groundwater Replenishment System
ICS Incident Command System
IERP Integrated Emergency Response Plan
LOS Level Of Service
MGD Million Gallons Per Day
NACWA National Association of Clean Water Agencies
NPDES National Pollutant Discharge Elimination System
NWRI National Water Research Institute
O & M Operations & Maintenance
OCCOG Orange County Council of Governments
OCHCA Orange County Health Care Agency
OCSD Orange County Sanitation District
OCWD Orange County Water District
OOBS Ocean Outfall Booster Station
OSHA Occupational Safety and Health Administration
PCSA Professional Consultant/Construction Services Agreement
PDSA Professional Design Services Agreement
POTW Publicly Owned Treatment Works
ppm parts per million
PSA Professional Services Agreement
RFP Request For Proposal
RWQCB Regional Water Quality Control Board
Glossary of Terms and Abbreviations
SARFPA Santa Ana River Flood Protection Agency
SARI Santa Ana River Interceptor
SARWQCB Santa Ana Regional Water Quality Control Board
SAW PA Santa Ana Watershed Project Authority
SCADA Supervisory Control And Data Acquisition
SCAP Southern California Alliance of Publicly Owned Treatment Works
SCAQMD South Coast Air Quality Management District
SOCWA South Orange County Wastewater Authority
SRF Clean Water State Revolving Fund
SSMP Sewer System Management Plan
SSO Sanitary Sewer Overflow
SWRCB State Water Resources Control Board
TDS Total Dissolved Solids
TMDL Total Maximum Daily Load
TSS Total Suspended Solids
WDR Waste Discharge Requirements
WEF Water Environment Federation
W ERF Water Environment & Reuse Foundation
WIFIA Water Infrastructure Finance and Innovation Act
WIIN Water Infrastructure Improvements for the Nation Act
W RDA Water Resources Development Act
Activated sludge process — A secondary biological wastewater treatment process where
bacteria reproduce at a high rate with the introduction of excess air or oxygen and consume
dissolved nutrients in the wastewater.
Benthos —The community of organisms, such as sea stars, worms, and shrimp, which live on,
in, or near the seabed, also known as the benthic zone.
Biochemical Oxygen Demand (BOD) — The amount of oxygen used when organic matter
undergoes decomposition by microorganisms. Testing for BOD is done to assess the amount of
organic matter in water.
Biogas—A gas that is produced by the action of anaerobic bacteria on organic waste matter in a
digester tank that can be used as a fuel.
Biosolids—Biosolids are nutrient rich organic and highly treated solid materials produced by the
wastewater treatment process. This high-quality product can be recycled as a soil amendment on
farmland or further processed as an earth-like product for commercial and home gardens to
improve and maintain fertile soil and stimulate plant growth.
Glossary of Terms and Abbreviations
Capital Improvement Program (CIP) — Projects for repair, rehabilitation, and replacement of
assets. Also includes treatment improvements, additional capacity, and projects for the support
facilities.
Coliform bacteria—A group of bacteria found in the intestines of humans and other animals, but
also occasionally found elsewhere, used as indicators of sewage pollution. E. coli are the most
common bacteria in wastewater.
Collections system— In wastewater, it is the system of typically underground pipes that receive
and convey sanitary wastewater or storm water.
Certificate of Participation (COP)—A type of financing where an investor purchases a share of
the lease revenues of a program rather than the bond being secured by those revenues.
Contaminants of Potential Concern (CPC) — Pharmaceuticals, hormones, and other organic
wastewater contaminants.
Dilution to Threshold (DIT) — The dilution at which the majority of people detect the odor
becomes the D/T for that air sample.
Greenhouse Gases (GHG) — In the order of relative abundance water vapor, carbon dioxide,
methane, nitrous oxide, and ozone gases that are considered the cause of global warming
("greenhouse effect').
Groundwater Replenishment System (GWRS) — A joint water reclamation project that
proactively responds to Southern California's current and future water needs. This joint project
between the Orange County Water District and the Orange County Sanitation District provides 70
million gallons per day of drinking quality water to replenish the local groundwater supply.
Levels Of Service (LOS) — Goals to support environmental and public expectations for
performance.
N-Nitrosodimethylamine (NDMA) — A N-nitrosamine suspected cancer-causing agent. It has
been found in the Groundwater Replenishment System process and is eliminated using hydrogen
peroxide with extra ultra-violet treatment.
National Biosolids Partnership (NBP)—An alliance of the National Association of Clean Water
Agencies and Water Environment Federation, with advisory support from the US Environmental
Protection Agency. NBP is committed to developing and advancing environmentally sound and
sustainable biosolids management practices that go beyond regulatory compliance and promote
public participation to enhance the credibility of local agency biosolids programs and improved
communications that lead to public acceptance.
Plume — A visible or measurable concentration of discharge from a stationary source or fixed
facility.
Glossary of Terms and Abbreviations
Publicly Owned Treatment Works (POTW) —A municipal wastewater treatment plant.
Santa Ana River Interceptor(SARI) Line —A regional brine line designed to convey 30 million
gallons per day of non-reclaimable wastewater from the upper Santa Ana River basin to the ocean
for disposal, after treatment.
Sanitary sewer—Separate sewer systems specifically for the carrying of domestic and industrial
wastewater. Combined sewers carry both wastewater and urban runoff.
South Coast Air Quality Management District (SCAQMD) — Regional regulatory agency that
develops plans and regulations designed to achieve public health standards by reducing
emissions from business and industry.
Secondary treatment — Biological wastewater treatment, particularly the activated sludge
process, where bacteria and other microorganisms consume dissolved nutrients in wastewater.
Sludge—Untreated solid material created by the treatment of wastewater.
Total Suspended Solids (TSS)—The amount of solids floating and in suspension in wastewater.
Trickling filter — A biological secondary treatment process in which bacteria and other
microorganisms, growing as slime on the surface of rocks or plastic media, consume nutrients in
wastewater as it trickles over them.
Urban runoff—Water from city streets and domestic properties that carry pollutants into the storm
drains, rivers, lakes, and oceans.
Wastewater—Any water that enters the sanitary sewer.
Watershed—A land area from which water drains to a particular water body. The Orange County
Sanitation District's service area is in the Santa Ana River Watershed.