LOS Angeles County Office of the Inspector General 21 3.244.7300 Tel Metropolitan Transportation Authority 818 West 7'h Street, Suite 500 21 3.244.7343 Fax

Metro Los Angeles, CA 9001 7

EXECUTIVE MANAGEMENT AND AUDIT COMMITTEE March 17,201 1

SUBJECT: OFFICE OF THE INSPECTOR GENERAL ACTIVITIES REPORT

ACTION: RECEIVE AND FILE

Receive and file this Office of the lnspector General (OIG) Report.

ISSUE

The OIG reports periodically on its activities.

DISCUSSION

1. During the 2" quarter of FY 201 1, the Investigations Unit opened 15 matters, and completed 21 matters. The 15 matters opened consisted of 9 investigations, 5 multi- site reviews (bus safety and compliance checks), and 1 investigative services request. We also issued 9 confidential investigative reports during the quarter. Eight of the reports discussed some violations and made recommendations for corrective actions:

a. Conflict of Interest and Misuse of Metro Time and Assets to Operate Cash Savings Pool, October 4, 201 0

b. Alleged Receipt of Unauthorized Gifts from Potential Contractor, October 6, 2010

c. Alleged Unauthorized Outside Employment, October 12, 2010

d. Review of Compliance with Prevailing Wage Laws, November 10, 2010

e. Request for Assistance - Surveillance of Bus Operator Performance, December 15,2010

f. Alleged Operator Misuse of Metro Property and Rule Violations, December 17, 201 0

g. Misuse of Metro Time and Assets to Operate Cash Savings Pool, December 21, 201 0

h. Alleged Supervisor Favoritism and Misuse of Floating Holidays, December 21, 201 0

i. Alleged Theft of Metro Supplies, December 27, 2010

ExpoIGold Line

At the request of the Expo Board, on January 18, 2011, the OIG completed a confidential report on the results of our investigative research on prospective proposers for the Exposition Metro Line Construction Authority (Expo) Light Rail Transit Project Phase 2. Our investigative research found reported relevant matters of interest pertaining to three of the four firms involving issues pertaining to their qualifications and responsibility. We provided Expo with a comprehensive list and documentary material of reported relevant matters of interest so they could consider it when a finallupdated responsibility analysis is conducted.

Following receipt of the OIG report, Expo's legal counsel reviewed and evaluated the contents of the report, and also conducted additional independent review. Counsel also recommended that Expo require certain certifications from the selected Proposer to assure that events similar to those included in the OIG1s report do not occur on the Phase 2 Exposition Light Rail Transit Project.

We are working with the CEO of the Metro Gold Line Foothill Extension Construction Authority to perform a similar review of prospective proposers.

Update on Prior Investigation

Also, we are pleased to provide an update on a prior OIG investigative report concerning the embezzlement of more than $18,000 of petty cash funds by a former Metro employee. On January 26, 2011, the County of Los Angeles sent a check payable to Metro for $1 8,162 of restitution paid by the former employee.

2. During the 2" Quarter of FY 2010, the OIG completed five audit reports:

a. Audit of MTA Litigation Cost Manaaement Practices

The LACMTA Board directed the OIG to perform a comprehensive audit of MTA's litigation costs and cost management performance. On November 18, 2010, the OIG reported the results of the audit to the Executive Management and Audit Committee. We continue to follow-up with the Legal Department to offer assistance in accomplishing progress towards increased efficiency.

b. Follow-up on Audit of Access Services

We performed a follow-up review of the status of implementation of 16 recommendations in our prior report concerning Access Services. This follow-up review was performed to determine whether Access Services had implemented appropriate actions to correct the deficiencies noted in the prior audit report.

We found that Access Services has completed implementing corrective actions on all, 16 recommendations in the prior audit report. These actions have improved the eligibility process, services, and operations.

c. Bus Operator Safety and Compliance Checks of Contract Bus Services

We performed undercover observations to monitor contracted bus operations during April to June 2010. We found that most contract bus operators performed their duties in accordance with Metro policies and rules. However, we found rule violations in approximately 37% of the observations made. Based on the results of our review, Metro's Transportation Contract Services department should ensure that contractors emphasize to operators compliance of rules concerning:

wheelchairs securement, notifying Dispatch when wheelchairs are not secured, calling out stops, wearing authorized uniforms, wearing seat belts, and not eating or drinking while driving.

Also, the contractors should ensure that the Public Address/Automatic Voice Annunciation systems on buses are working and operators use them.

In responding to the findings in the report, the Interim Director, Service Operations stated:

"Metro must proceed with upgrades to the contract bus fleet to ensure that the automated bus stop annunciation systems are installed and working on all contract fleet buses. We will work with the appropriate Metro departments to complete installation of Automated Voice Annunciation systems on contract fleet buses. "

"We will continue to use a 'Mystery Rider' program involving a consultant to provide ongoing assessment of operators for purposes of identifying operators who are not in compliance with Metro's safety and customer senlice policies, and ensuring that appropriate training andlor counseling/disciplinary actions are being taken. "

d. Statutorilv Mandated Audit of Miscellaneous Ex~enses for the Period April to June 201 0

Pursuant to Section 130051 of the Public Utilities Code, we reviewed certain miscellaneous expenses such as travel, meals and refreshments, private club dues, and membership fees for the period April to June 2010. The audit did not identify any reportable conditions.

e. Statutorilv Mandated Audit of Miscellaneous Expenses for the Period Januarv to March 201 0

Pursuant to Section 130051 of the Public Utilities Code, we reviewed certain miscellaneous expenses such as travel, meals and refreshments, private club dues, and membership fees for the period January to March 2010. The audit did not identify any reportable conditions.

3. Other Department Activities. During the 2nd Quarter of FY 201 1, the OIG:

To enhance transparency in government we began posting copies of OIG audit reports on the website.

Continued quarterly bus operations observations and reporting concerning bus operator ADA compliance, safety, and courtesy.

Began development of a training program for investigators to enhance identifying investigative leads and critical areas vulnerable to fraud, waste, and abuse. Participated in free training programs presented by the Los Angeles County District Attorney's Office and the National White Collar Crime Center. Also, joined the Procurement Fraud Working Group lead by the U. S. Attorney's Office.

Acting Inspector General