J-2_Quality_Assurance_and_Surveillance_Plan.pdf

DTFT6014R00001

J-2 Quality Assurance Surveillance Plan (QASP)

Capital Investment Grant Program

Introduction This Quality Assurance Surveillance Plan (QASP) provides a systematic method to evaluate performance for the stated contract. This QASP explains the following:

• What will be monitored.

• How monitoring will take place.

• Who will conduct the monitoring.

• How monitoring efforts and results will be documented.

This QASP does not detail how the contractor accomplishes the work. Rather, the QASP is created with the premise that the contractor is responsible for management and quality control actions to meet the terms of the contract. It is the Government’s responsibility to be objective, fair, and consistent in evaluating performance. In addition, the QASP should recognize that unforeseen and uncontrollable situations may occur.

This QASP is a “living document” and the Government may review and revise it on a regular basis. However, the Government shall coordinate changes with the contractor. Updates shall ensure that the QASP remains a valid, useful, and enforceable document. Copies of the original QASP and revisions shall be provided to the contractor and Government officials implementing surveillance activities.

The following FAR clauses will apply:

52.246-4 Inspection of Services – Fixed-Price, 52.246-6 Inspection of Services – Time-and-Material and Labor-Hour

1. Objectives

The contractor(s) shall provide support conducting detailed Financial Capacity Assessments (FCAs) and Financial Assessments (FA) for projects seeking Section 5309 funds. FCAs and FAs entail a review of the financial condition and capacity of the project sponsoring agency and the level and stability of local financial commitment to the project. The FCA and FA also consider the project sponsor’s system-wide financial capacity, assessing future operating and infrastructure maintenance needs, as well as ongoing “state of good repair” needs for rehabilitation and replacement of capital assets.

1.1 This QASP has been developed and designed by the Contracting Officer’s Representative

(COR) within the Office of Planning and Environment, Office of Project Planning, for the overall conduct, implementation and deliverables associated with the Capital Investment Grant Program Contract xxxxxxxxxxxxxxxxx.

This surveillance plan is program specific and is designed to provide monitoring, inspecting and reporting of all contractor operations and deliverables as associated with the above-noted program.

The following work requirements shall represent the basis upon which the QASP is based.

The Performance Requirements Summary for these requirements is outlined below at the attached links:

a. CLIN 0001- Financial Assessments

Capital Investment Program Annual Report Evaluation and Rating Process (available on the public USDOT website)

Sample Report Format – Appendix 1

b. CLIN 0002 & 0003 - Financial Capacity Assessments & Refreshes

Guide for Conducting Financial Capacity Assessments

Guidelines and Standards for Assessing Local Financial Commitment

1.2 The method of inspection will be 100% inspection.

1.3 The objective of this Surveillance Plan is to evaluate the contractor’s performance in the conduct and implementation of the Capital Investment Grant Program financial reviews.

2. Surveillance Plan

2.1 This Surveillance Plan will employ 100% Inspection, Scheduled Observations and

Unscheduled Observations (as needed) as methods of inspection.

2.2. The preferred method of surveillance is 100% inspection for reports during the contract duration, or once per month for the monthly progress reports when active, i.e., once every 30 days or as otherwise deemed necessary by the COR. Inspection techniques and methods shall be determined by an analysis of the standard developed in the guidance writings for each Contract Line Item Number (CLIN) detailed above. All standards will be reviewed and analyzed as the measure of performance accomplishment. Typically a draft is submitted to FTA and once an inspection has been performed with comments, the draft will be finalized by the Contractor. Specific timeframes for initial submission and any required revisions for the CLIN employed will be used as an additional measure of performance.

2.3 100% Inspection is the method used to evaluate the contractor as required by the contract.

Using this method of inspection, all parts of the contract are monitored for evaluation. Such performance requirements more than adequately cover all practices deemed critical to the http://www.fta.dot.gov/documents/FY13_Evaluation_Process.pdf http://www.fta.dot.gov/12304_9068.html performance and monitoring of this contract. Failure to adequately address these contract data requirements would have an adverse impact upon the overall implementation of the Capital Investment Grant Program.

2.4 Scheduled Observations will be inspections previously scheduled and coordinated with the contractor’s project manager and/or lead reviewer. Scheduled Observations shall include, but not be limited to the following:

a. Monthly Progress Reports (see Appendix 2 for format).

b. Special Assignments (TBD by COR)

2.5 Unscheduled Observations shall be conducted by the COR at his/her Discretion on an as needed basis under Tightened inspection level, detailed below. Observations shall include, but not be limited to, on-site visits to selected grantees and subrecipients and visits and observations of selected New Start meetings.

Discrepancies noted during the course of the surveillance, even if not of sufficient degree to render the service unsatisfactory for the purpose of payment deductions or non-payment, shall require corrective action by the contractor as noted by the COR or his/her designee in an agreed upon timeframe between the vendor and government.

Further, the COR shall notify the contractor’s project manager of the Deficiency as soon as is feasible and request immediate corrective and/or remedial action. If the noted deficiency is not corrected and/or adequately addressed as deemed appropriate by the COR, the COR shall notify the Contracting Officer, in writing, for immediate disposition.

2.6 Monthly surveillance documentation and reports prepared by the COR, if applicable, shall be maintained in the COR file. The COR file shall also contain a copy of the applicable contract, all contract amendments and modifications, surveillance reports, appropriate forms, etc., and other documentation as required by the Contracting Officer.

3.0 Inspection Levels

3.1 The Surveillance Plan is designed for 2 levels of inspection, Normal and Tightened. These levels are only pertinent to the 100% Inspection method of surveillance. Upon initialization of the contract, the Normal level of inspection will be used. If the contractor performs well over the first 6 months of the contract and number of defects and/or deficiencies in each randomly sampled item is less than the reject size, the COR will keep the inspection level at Normal.

3.2 When Normal inspection is in effect and 2 out of 3 consecutive items have been rejected on the original inspection, Tightened inspection will be instituted. Changing from Normal to Tightened inspection levels shall have the Contracting Officer’s approval.

4.0 Surveillance Forms

4.1 This Quality Assurance Surveillance Plan shall not employ the use of individually designed sampling guides for the requirements noted on the Performance Requirements Summary (PRS). Monthly, visual inspections and analysis of the monthly requirements shall suffice as the noted surveillance method. This process shall entail, but not be limited to the following:

a. 100% inspection of all New Starts Reports,

b. 100% inspection of all Financial Capacity Assessments,

c. Scheduled review of Monthly Progress Reports, and

d. 100% inspection of all Special Assignments.

4.2. These quality assurances, and requisite following up and/or deficiency notices to the

Contracting Officer will further substantiate the government’s position should the government seek monetary deduction from the contractor in event of poor performance.

5. Government Roles and Responsibilities

5.1 The following personnel shall oversee and coordinate surveillance activities:

a. Contracting Officer (CO) - The CO shall ensure performance of all necessary actions for effective contracting, ensure compliance with the contract terms, and shall safeguard the interests of the United States in the contractual relationship. The CO shall also assure that the contractor receives impartial, fair, and equitable treatment under this contract.

The CO is ultimately responsible for the final determination of the adequacy of the contractor’s performance.

Assigned CO: Carlene Jackson Organization or Agency: Federal Transit Administration Telephone: 202-366-0432 Email: Carlene.Jackson@dot.gov

b. Contract Specialist (CS) - The CS acts as an acquisition consultant and serves as liaison between the USDOT Federal Transit Administration Office of Administration (FTA- TAD) and the Office of Planning and Environment (TPE).

Assigned CS: Alexander Miller Telephone: 202-366-5217 Email: alexander.miller@dot.gov

c. Contracting Officer’s Representative (COR) - The COR is responsible for technical administration of the contract and shall assure proper Government surveillance of the contractor’s performance. The COR shall keep a quality assurance file. At the conclusion of the contract or when requested by the CO, the COR shall provide documentation to the CO. The COR is not empowered to make any contractual commitments or to authorize any contractual changes on the Government’s behalf. The contractor shall refer any changes they deem may affect contract price, terms, or conditions to the CO for action.

Assigned COR: Michael Patella Telephone: 202-366-0815 Email: Michael.patella@dot.gov

6. Contractor Representatives:

The following employees of the contractor serve as the contractor’s Program Manager for this contract. <Communication should occur with them during QASP development. It will help if they review the draft QASP and accept the final version.>

a. Program Manager - <upon award, enter name> Telephone: <enter number> Email: <enter address>

7.0 Contract Deficiency Report

7.1 If the noted observations are such that the number of defects and/or deficiencies exceed the

Acceptable Quality Level (AQL), the month’s services will be considered unsatisfactory for the particular requirement under surveillance. If government action or lack of action caused the unsatisfactory performance, the defects will not be counted. A memorandum will be prepared by the COR providing an explanation of the government’s action and submitted with the monthly report to the Contracting Officer.

7.2 Unsatisfactory contract performance shall be immediately reported to the Contracting

Officer utilizing contract analysis of the requirements as the basis for unsatisfactory performance. The contractor will be provided reasonable opportunity and recourse to substantiate and/or deny the deficiency and note corrective/remedial actions that will serve to remedy the cited deficiency(ies) and how a reoccurrence will be avoided in the future.

If unsatisfactory performance occurs in an area based on the COR’s sampling, observation or other critical review, the contractor will be notified accordingly and asked to remedy the noted deficiency within a particular timeframe. A record of this occurrence shall be maintained in the COR file and the Contracting Officer shall be immediately notified.

Appendix 1 – New Starts Financial Assessment Format

FY 2014 NEW STARTS FINANCIAL ASSESSMENT

PROJECT: Insert Project Name Here PROJECT LOCATION: Insert Project Location Here REVIEW DATE: Insert Review Date Here

FINANCIAL RATINGS SUMMARY

Comparison of FY 2011, FY 2012 and FY 2013 Ratings ( 1 = Low; 2 = Medium-Low; 3 = Medium; 4 = Medium-High; 5 = High )

Comparison of FY 2012, FY 2013 and FY 2014 Ratings ( 1 = Low; 2 = Medium-Low; 3 = Medium; 4 = Medium-High; 5 = High )

Overall Financial Rating

Non-Section 5309 New Starts Share

Rating

Project Capital Financial Plan

Rating

Project Operating

Financial Plan

FY 2012

FY 2013

FY 2014 +1 or n/a Change

Capital and Operating Finance Plan

Capital & Operating Condition

Commitment of Capital & OperatingFunds

Financial Capacity Estimates and Assumptions

FY 2012

FY 2013

FY 2014

Change

[State abbreviation, City, Project Title]

Factor Rating Comments Local Financial Commitment Rating Medium

Non-Section 5309 New Starts Share +1 level The New Starts share of the project is xx.x percent.

Project Financial Plan

Medium

Capital and Operating Condition (25% of capital plan rating)

Medium The average age of the bus fleet is Insert Amount Here years, which is (in-line with, greater than, less than) the industry average.

The most recent bond ratings for Sponsor, issued in Insert Date Here, are as follows:

Moody’s Investors Service Rating, Fitch’s Rating and Standard & Poor’s Corporation Rating.

Sponsor's current ratio of assets to liabilities as reported in its most recent audited financial statement is ______ (FY20__).

There have been no service cutbacks or cash flow shortfalls in recent years (or include a sentence that there have been cutbacks or shortfalls if that is the case).

Commitment of Capital and Operating Funds (25% of capital plan rating)

Medium Approximately xx percent of the non-Section 5309 New Starts funds are committed or budgeted. Sources of funds include {sources starting with federal, then state, then local. All bond sources should include the source of repayment }.

Approximately xx percent of of the funds needed to operate and maintain the transit system in the first full year of operation are committed or budgeted, while the remainder is planned. Sources of funds include {sources, starting with federal, then state, then local. All bond sources should include the source of repayment }.

Capital and Operating Cost Estimates, Assumptions and Financial Capacity (50% of capital plan rating)

Medium Growth in revenue assumptions are more optimisitic, conservative, reasonable than historical experience.

The capital cost estimate is optimisitic, conservative, reasonable.

The financial plan shows that the Grantee has the financial capacity to cover cost increases or funding shortfalls equal to at least Insert Amount Here percent of estimated project costs.

Assumed farebox collections are optimisitic, conservative, consistent and sales tax revenues are optimisitic, conservative, consistent with historical experience.

Projected cash balances and reserve account are Insert Amount Here percent of annual systemwide operating expenses.

PROJECT SUMMARY

PROJECT DESCRIPTION

Brief description of the proposed project including project length, components (mode, technology, number of stations, and number of vehicles), termini, and segmentation (if applicable).

PROJECT DEVELOPMENT PHASE

• Project is currently in (choose from the following: Alternatives Analysis, Preliminary

Engineering, Final Design).

• Current schedule indicates:

− Completion of NEPA by Insert Date Here

− Start of Construction by Insert Date Here

− Begin Revenue Operation by Insert Date Here

LOCAL PROJECT SPONSOR

Complete name of the sponsoring agency.

AGENCY DESCRIPTION

Identify participating agencies and their respective roles. By agency, include a brief discussion of organization, structure, authority and responsibilities.

PROJECT FINANCIAL SUMMARY

Total capital cost ($YOE) $ Insert Amount Here (including $ Insert Amount Here in financing charges)

Section 5309 New Starts Share $ Insert Amount Here Insert Percentage Here%

Non-Section 5309 New Starts Share $ Insert Amount Here Insert Percentage Here%

Annual project O&M costs (first full year of operation) $ Insert Amount Here

Total systemwide annual O&M costs (current year) $ Insert Amount Here

Total systemwide annual O&M costs (first full year of New Starts Operation) $ Insert Amount Here

REGIONAL ECONOMIC CONDITIONS AND FORECASTS

Brief discussion of regional economic forecast and implications for project and agency. Extract from material provided by the sponsoring agency. Please indicate if this information was not included in the financial plan submitted by the sponsoring agency.

IMPLEMENTATION ISSUES

• Other Planned Capital Projects in the Region. Discuss potential implementation issues related to the New Starts Project as a result of any other planned capital projects in the region, if any.

• Legislation, Referenda, or Planning Approvals Needed. Discuss, if any.

• Innovative Financing Techniques Under Consideration. Discuss, if any.

FINANCIAL RATINGS

Assessment of Local Financial Commitment

Proposed Non-Section 5309 New Starts Share of Project Capital Costs

$Insert Amount Here Insert Percentage Here %

ASSESSMENT OF FINANCE PLAN

Current Capital & Operating Condition of Agency Insert Rating Here

Discuss (summarize in paragraph form):

• Average age of bus fleet

• Average age of existing rail fleet and facilities (if applicable)

• Bond ratings (if any) and year issued

• Rating yielded by these factors based on Table 3 of Guidance.

Discuss (summarize in paragraph form):

• What is the current operating ratio (current assets divided by current liabilities) reported in the most recent audited financial statement? Specify if this information is not available or was not provided.

• Have there been recent historical cash flow shortages?

• Does the historical data show any recent service cutbacks (e.g. decrease in vehicle revenue miles) or budgetary issues?

Commitment of Capital and Operating Funds Insert Rating Here Referencing Table 1, discuss basic strategy in the capital funding plan (summarize in paragraph form):

• What percentage of non-Section 5309 capital funds is committed? What rating does this infer (see Table 3 from Guidance)?

• What are the sources of non-federal funds for the project?

• To what extent are those funds committed, planned or budgeted, and what will it take for those funds to become committed? Discuss supporting documentation submitted that explains/verifies level of commitment of funds.

• What legal or legislative action is required to commit funds or establish the funding source?

• Does the agency have a reasonable plan for achieving commitment for sources not yet committed?

• What has been the historical experience of this agency in obtaining funding? What is the same or different about this effort?

• Provide similar discussion for all funding sources, organized according to federal, state, local and private sources.

• If bonding is proposed, discuss the sources of funds for payback of the bonds. Are there other projects being funded from the same source? Are the capital funds subject to annual appropriation?

• Identify and discuss innovative financing techniques, their benefits and risks.

Referencing Table 2, discuss these operating factors (summarize in paragraph form):

• Reference Table 2, sources of systemwide operating funds for the first year of operation of the New Starts project.

• What percentage of operating funds is committed? What rating does this infer (see Table 4 from Guidance)?

• Does the agency have a reasonable plan for achieving commitment for sources not yet committed?

• What has been the historical experience of this agency in obtaining funding? What is the same or different about this effort?

• How stable are proposed operating funds? Do they rely on future legislative or voter action?

• Provide similar discussion for all operating funding sources, organized according to federal, state, local and private sources.

Cost Estimates, Financial Capacity Estimates and Assumptions Insert Rating Here

Capital Assumptions

Discuss and determine what rating is inferred (see Table 3 from Guidance):

• Cost estimate methodology and assumptions, and reasonableness of assumptions (reference PMOC reports).

• Revenue growth rates and their reasonableness compared with historical information.

• Inflationary assumptions and their reasonableness.

• Federal funding assumptions and their reasonableness.

• Are assumptions in the cash flow consistent with those in the CIP and fleet management plans?

• Does the agency have sufficient capital resources to construct the New Starts project and continue to carry out the projects in the CIP?

• If the financial plan assumes debt financing for the project, are financing cost estimates based on reasonable assumptions?

• How much funding shortfall or cost increase can the applicant handle? What factors enable them to achieve this level of capacity, e.g., access to funds via cash reserves, additional debt capacity, line of credit, access to capital market, or legislative commitments?

• Discuss debt coverage ratios

• Discuss sensitivity analysis results

Operating Assumptions

Discuss and determine what rating is inferred (see Table 4 from Guidance):

• The method used by the grantee to develop operating and maintenance cost estimates.

• Annual project O&M costs relative to the existing system.

• New Starts project vehicle revenue miles and/or hours relative to the existing system.

• Required subsidy for the New Starts project

• Forecast of growth in operating and maintenance expenses compared to historical trends.

• Is the operating plan predicated on reasonable assumptions regarding revenue growth rates, inflation rates, fare increases and farebox recovery? Discuss each in detail.

• Has a fare elasticity factor been included in the cash flow analysis to account for a loss in ridership when fares are increased?

• Are ridership and fare policy assumptions included in the financial plan consistent with the ridership model?

• Forecasts of operating revenues compared to trends. Are operating revenues coming from existing sources with a solid history, or from new sources that are more difficult to forecast?

• What may be changing to account for differences?

• Are there projected cash flow shortages in the operating plan?

• What are the projected cash balances or reserve accounts over the life of the 20-year cash flow, expressed in months of operation?

• What levels of operating surpluses or deficits are forecast over the life of the 20-year cash flow?

Highlight key milestones, such as highest and lowest surplus and/or deficit (in cash flow).

• What other operating changes will affect the agency’s ability to operate and maintain the system?

• What rating does this imply (see Table 4 of Guidance)?

Summary Financial Plan Rating Insert Rating Here Discuss:

Key elements of “high” or “low” ratings, from sections above, that had the most influence on the summary rating. Address offsetting elements as appropriate.

INSERT TABLE 1 HERE

Instructions to insert table into document:

• Copy table from Excel.

• To paste, go to Edit – Paste Special and select the Picture format, and then click Ok.

• Follow the same instructions to insert Table 2.

• There should be no need to resize the table or make any other adjustments.

Table 1 Proposed Sources of Capital Funds ($000 Year of Expenditure)

Amount ($) % of Total Level of

Commitment* Maturity of Sources**

Planning and PE Funds Expended to

Date

Federal Section 5309 N/A N/A

Other Federal:

STP

CMAQ

Other Subtotal Other Federal $0

State:

Subtotal State $0

Local:

Subtotal Local $0

Other:

Subtotal Other $0

Total $0 $0

* Commitment Codes ** Maturity Codes Committed C Existing E Budgeted B New N Planned P Not Specified NS Uncertain U Not Specified NS

Level of Commitment of Capital Funds Amount ($) %

Committed $0 Budgeted $0 Planned $0 Uncertain $0 Not Specified $0

Total $0 0.0%

Maturity of Capital Funding Sources Amount ($) %

Existing $0 New $0 Not Specified $0

Total $0 0.0%

INSERT TABLE 2 HERE

Follow instructions on page eight for insertion of Table 2.

Table 2 Proposed Sources of Systemwide Operating Funds First Full Year of Operation of New Starts Project ($000)

Amount ($) % of Total Level of

Commitment* Maturity of Sources**

Federal:

Formula

CMAQ

Other Subtotal Federal $0

State:

Subtotal State $0

Local:

Subtotal Local $0 0.0%

Other:

Subtotal Other $0 0.0%

Total $0

** Maturity Codes Committed C Existing E Budgeted B New N Planned P Not Specified NS Uncertain U Not Specified NS

Commitment Status Amount ($) %

Committed $0 Budgeted $0 Planned $0 Uncertain $0 Not Specified $0 Total $0 0.0%

Maturity of Commitment of Capital Funds Amount ($) %

Existing $0 New $0 Not Specified $0 Total $0 0.0%

*Level of Comm. Codes

*Maturity of Commitment table at bottom of page should be Operating Capital Funds, not Capital Funds

CONCLUSIONS

• Highlight key findings

• Summarize conclusions and basis for overall rating

• Identify primary risk areas

RECOMMENDATIONS FOR IMPROVEMENT OF RATING

• Identify major recommendations for improvement, including missing information and plan weaknesses. Be as specific as possible.

Appendix 2 – Monthly Progress Report Format

Contractor Name Monthly Report for

FTA Capital Investment Grant Assessments Contract: DTFT60-D-XX-XXXXX / Task Order #: XXXX TEAM Project # XX-XX-

XXXX-XX

Performance Period: (Month and Year)

Description of Work Completed The following active assignments have been issued on this contract to-date:

1. Project and Location (Hourly CLIN x)

This task order was issued {date}, under CLIN X to edit an FCA prepared under an earlier, separate contract. A revised FCA was delivered to FTA in May 2009. Additional effort was to be expended on an update of the FCA after sufficient progress was made toward an FFGA for the project. No additional work will be undertaken until further notice from FTA.

Total Contract Budget

Billed/Incurred in Prior Months

Billed/Incurred in Current Month

Total Billed/Incurred

Balance Remaining x hours xx hours x hours x hours x hours

2. Project and Location (Fixed Price CLIN x)

This task order was issued {date}, under CLIN x. All work on this task order was complete as of May 2013.

Fixed Price Billed/Incurred in

Prior Months Billed/Incurred in

Current Month Total

Billed/Incurred Balance

Remaining $x $x $x $x $x

Work Scheduled for July 2013 No further work is planned under contract x.

Problems Encountered/Corrective Measures None to report.

Budget vs. Actual Time All task orders are within budget, unless where otherwise indicated.

Items Requiring COTR/FTA Action None at this time.

Appendix 2 – Monthly Progress Report Format