Finance Committee
December 16, 2024

AGENDA

FINANCE/AUDIT COMMITTEE

SPECIAL MEETING NOTICE
DECEMBER 16, 2024
PUBLIC MEETING 3:00 P.M.

Members
Victor M. Gordo, Mayor
Tyron Hampton, District 1
Rick Cole, District 2
Gene Masuda, District 4

STAFF
Matthew Hawkesworth, Director of Finance
Arnold Lee, Chief Assistant City Attorney
Gloria Acevedo, Recording Secretary

MISSION STATEMENT
The City of Pasadena is dedicated to delivering exemplary municipal services, responsive to our entire community and consistent
with our history, culture, and unique character.

In compliance with the Americans with Disabilities Act of 1990, Assistive Listening Devices are available from the City Clerk’s Office with a 24-hour advance notice.

Please call (626) 744-4124 to request use of a listening device.

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Items on the agenda may not be called in order listed. Agendas and supporting documents are available on the Internet at
https://www.cityofpasadena.net/commissions/city-council-finance-committee/

Materials related to an item on this Agenda submitted to the Finance/Audit Committee after distribution of the agenda packet will be posted online and listed as: “Supplemental Agenda Material Received after the Posting of the agenda”

PUBLIC COMMENT AT THE FINANCE/AUDIT COMMITTEE SPECIAL MEETING FOR DECEMBER 16, 2024, AT 3:00 P.M. WILL BE ACCEPTED IN-PERSON AND BY VIDEOCONFERENCE/TELECONFERENCE.

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TO VIEW A LIVE STREAM OF THE MEETING:

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DEPARTMENT OF FINANCE

CITY OF PASADENA

NOTICE OF SPECIAL MEETING

OF THE FINANCE/AUDIT COMMITTEE
DECEMBER 16, 2024
PUBLIC MEETING: 3:00 P.M.

PASADENA CITY HALL, COUNCIL CHAMBER
100 NORTH GARFIELD AVENUE, ROOM S249
NOTICE IS HEREBY GIVEN that the special meeting of the Finance/Audit Committee will be held on Monday, December 16, 2024, at 3:00 p.m. in the Pasadena City Hall Council Chambers S249.

I HEREBY CERTIFY that this notice, in its entirety, was posted on the Internet at www.cityofpasadena.neUcommissions/city-council-finance-committee and on the Council Chamber Bulletin Board, Room S249 and the Bulletin Board in the rotunda area, City Hall, 100 North Garfield Avenue, this 12th day of December, 2024, by 5:30 p.m., and that copies hereof were faxed, emailed or delivered to each member of the City Council and to each local newspaper of general circulation, radio or television station requesting notice in writing, all of which recipients are identified on the distribution list set forth herein below.

DISTRIBUTION:

City Council
City Manager
City Attorney
Public Information Officer
Los Angeles Times
Pasadena Independent
ColoradoBoulevard.net
La Opinion
Pasadena Now
Pasadena Star News
Pasadena Weekly
Conversation Live
loria Acevedo, Recording ecretary
Finance/Audit Committee
In compliance with the Americans with Disabilities Act of 1990, listening assistive devices are available from the City Clerk's Office with a 24-hour advance notice.

Please call (626) 7 44-4124 to request use of a listening device.

Language translation services may be requested with 24-hour advance notice.

Habra servicio de interpretaci6n disponible para estas juntas llamando al (626) 744-4124 por lo menos con 24 horas de anticipaci6n.

SPECIAL MEETING
AGENDA

FINANCE/AUDIT COMMITTEE
DECEMBER 16, 2024

Public Meeting: 3:00 P.M.

Council Chamber, Pasadena City Hall
100 North Garfield Avenue, Room S249

PUBLIC MEETING – 3:00 P.M.

ROLL CALL

PUBLIC COMMENT – LIMITED TO ITEMS ON THIS SPECIAL MEETING

AGENDA AND WILL BE HEARD AT THE TIME THE ITEM IS CONSIDERED

APPROVAL OF MINUTES

November 25, 2024 Special Meeting
December 9, 2024 Cancellation Notice

NEW BUSINESS

1. AUTHORIZE THE CITY MANAGER TO ENTER A THIRTY-SIX MONTH OFFICE LEASE AGREEMENT WITH 199 S. LOS ROBLES, LLC., SAND 199 LOS ROBLES, LLC. AND ROBLES SM, LLC. FOR THE PREMISES LOCATED AT 199 S. LOS ROBLES AVE. SUITE #405, IN AN AMOUNT NOT TO EXCEED $1,242,578

FOR THE HOUSING DEPARTMENT AND AMEND THE HOUSING
DEPARTMENT’S FISCAL YEAR 2025 OPERATING BUDGET BY
APPROPRIATING $709,488 FROM THE GENERAL FUND’S UNAPPROPRIATED

FUND BALANCE

2. AUTHORIZE THE CITY MANAGER TO ENTER INTO A FUND TRANSFER

AGREEMENT WITH THE LOS ANGELES COUNTY FLOOD CONTROL DISTRICT

FOR THE SAFE, CLEAN WATER PROGRAM

INFORMATION ONLY

3. FINAL REPORT FOR THE AUDIT OF FLEET MANAGEMENT PRACTICES

ADJOURN
PAGE 1
APP

ROVAL OF MINUTES
 November 25, 2024 Special Meeting
 December, 9, 2024 Cancellation Notice
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01 11/25/24 Finance Committee

CITY OF PASADENA

FINANCE COMMITTEE MINUTES

PASADENA CITY HALL
100 NORTH GARFIELD AVENUE
CITY HALL COUNCIL CHAMBER S249
NOVEMBER 25, 2024

SPECIAL MEETING
OPENING Chair Gordo called the specia l meeting of the Finance Committee to order at 3:18 p.m.

ROLL CALL: Mayor Victor M. Gordo (Chair)
Councilmember Tyron Hampton (arrived at 3:26 p.m.)
Councilmember Felicia Williams
Staff: Miguel Márquez, City Manager
Matthew Hawkesworth, Acting Assistant City Manager/ Director of Finance
Arnold Lee, Acting Chief Assistant City Attorney
Kris Markarian, Acting Director of Public Works
Vic Erganian, Deputy Finance Director/City Treasurer
Byanca Banaga, Senior Administrative Analyst
Jim Wong, Senior Project Manager
William Grisafe, Police Commander
Anthony Russo, Police Lieutenant
Brent Maue, Acting City Engineer
Sandra Campos, Acting Recording Secretary
APPROVAL OF MINUTES: It was moved by Councilmember Williams, seconded by Chair Gordo, to Approve the minutes of the October 28, 2024, Special Finance/Audit Committee and the cancellation notice of November 14, 20204 (Motion Unanimously carried) (Absent: Councilmember Hampton)
OLD BUSINESS: FY 2025 CAPITAL IMPROVEMENT PROGRAM - FIRST QUARTER

MONITORING REPORT
Chair Gordo introduced the item, with no questions the item was received and filed.

FINANCIAL UPDATE OCTOBER 2024
Chair Gordo introduced the item and Matthew Hawkesworth, Acting Assistant City Manager/Director of Finance provided a PowerPoint presentation and responded to questions.

Councilmember Williams inquired about the Los Angeles County Tax Assessment (county tax assessor’s) projections for 2025 and if they are PAGE 3
03 11/25/24 Finance Committee
Councilmember Hampton requested for staff to consider adding an ordinance to address hardship s. The ordinance should address, payment plans, a provision to waive all City fees, and an agreement with the operators that their fees will be waived in cases where the City waives all fees. Councilmember Hampton expects a report on the findings to come back to the Finance Committee.

Chair Gordo expressed concern for residents who are unable to pay the impound fees associated with vehicle towing and asked staff to consider the feasibility for the City to provide resources.

It was moved by Councilmember Williams, seconded by Councilmember Hampton, to approve staff’s recommendation and forward the item to the City Council for consideration. (Motion Unanimously carried) (Absent: None)
ANNUAL ADJUSTMENTS TO THE FISCAL YEAR 2025 SCHEDULE
OF TAXES, FEES, AND CHARGES RELATED TO NEW YEAR’S DAY

AND THE ROSE BOWL
Chair Gordo introduced the item and Matthew Hawkesworth, Acting Assistant City Manager/Director of Finance, introduced Byanca Banaga, Senior Administrative Analyst.

It was moved by Councilmember Hampton, seconded by
Councilmember Williams, to approve staff’s recommendation and forward the item to the City Council for consideration. (Motion Unanimously carried) (Absent: None)

QUARTERLY INVESTMENT REPORT - QUARTER ENDING
SEPTEMBER 30, 2024
Chair Gordo introduced the item and Matthew Hawkesworth, Acting Assistant City Manager /Director of Finance, introduced Vic Erganian, Deputy Finance Director/City Treasurer, who provided a PowerPoint presentation.

Councilmember Hampton thanked Councilmember Williams for her service to the Finance Committee and the City. Chair Gordo echoed Councilmember Hampton’s comments.

Councilmember Williams thanked the Finance Committee , City Manager, Miguel Márquez, and staff for all the collaborate efforts.

Mr. Hawkesworth, reported that a letter providing support for the City’s investment portfolio and recogniz ing Councilmember Williams for her service to the Finance Committee Meeting was received, posted online, and distributed to the Finance Committee.

PAGE 4
02 11/25/24 Finance Committee
in line with what the City’s has projected. Mr. Hawkesworth responded that the county tax assessor’s office is estimating a 2% growth which , is in line with the Consumer Price Index. He added that property values in the residential space maintain strong while the commercial sector may face some challenges.

Chair Gordo asked for the current General Fund Balance . Mr.

Hawkesworth shared that the 15% Emergency Reserve and the 5% Operating Reserve balances round up to $68 million and at yearend the Section 115 Trust had a balance of $13.2 million.

The item was received and filed.

NEW BUSINESS: AMEND THE HOUSING DEPARTMENT’S FISCAL YEAR 2025 OPERATING BUDGET IN THE AMOUNT OF $3,237,000 FOR THE
CENTENNIAL PLACE PROJECT AT 235 E. HOLLY STREET;

APPROVE THE KEY TERMS OF AN AFFORDABLE HOUSING LOAN

AGREEMENT WITH ABODE COMMUNITIES
Chair Gordo introduced the item and Matthew Hawkesworth, Acting Assistant City Manager /Director of Finance , introduced Jim Wong, Senior Project Manager, who provided a PowerPoint presentation and responded to questions.

Councilmember Williams requested clarification on potential changes to services and resident qualifications . According to Mr. Wong , as the program transitions from primarily homeless individuals to primarily low/extremely low seniors, the case load for management services should see a reduction, no services will be eliminated. Mr. Wong responded that there will be changes to the qualification requirements such as the developer/owner will gain control over the applicant pool; therefore, streamlining the application process by eliminating the need for applicants to apply through the Los Angeles County.

It was moved by Councilmember Hampton, seconded by
Councilmember Williams, to approve staff’s recommendation and forward the item to the City Council for consideration. (Motion Unanimously carried) (Absent: None)

DIRECT THE CITY ATTORNEY TO PREPARE AN ORDINANCE
WITHIN 60 DAYS AMENDING CHAPTER 10.46 OF THE

PASADENA MUNICIPAL CODE UPDATING THE POLICE

TOWING FRANCHISE PROCESS AND ADOPT A RESOLUTION
AMENDING THE FISCAL YEAR 2025 GENERAL FEE SCHEDULE

ADJUSTING POLICE IMPOUND AND STORAGE FEES
Chair Gordo introduced the item and Anthony Russo, Police Lieutenant, provided a PowerPoint presentation and responded to questions.

PAGE 5
04 11/25/24 Finance Committee
It was moved by Councilmember Williams, seconded by Councilmember Hampton, to approve staff’s recommendation and forward the item to the City Council for consideration. (Motion Unanimously carried) (Absent: None)
Councilmember Hampton requested for a follow up report on the status of the annex buildings in the Hahamongna Watershed Park, to be presented to a future Finance Committee Meeting.

ADJOURNMENT: On the order of the Chair, the special meeting of the Finance Committee was adjourned at 4:26 p.m.

ATTEST: ______________________
Mayor Victor Gordo, Chair
Finance Committee
____________________
Gloria Acevedo
Recording Secretary
PAGE 6
PAGE 7

NEW BUSINESS
ITEM 1

1. AUTHORIZE THE CITY MANAGER TO ENTER A THIRTY-
SIX MONTH OFFICE LEASE AGREEMENT WITH 199 S. LOS
ROBLES, LLC., SAND 199 LOS ROBLES, LLC. AND ROBLES
SM, LLC. FOR THE PREMISES LOCATED AT 199 S. LOS
ROBLES AVE., SUITE #405, IN AN AMOUNT NOT-TO-
EXCEED $1,242,578 FOR THE HOUSING DEPARTMENT
AND AMEND THE HOUSING DEPARTMENT’S FISCAL YEAR
2025 OPERATING BUDGET BY APPROPRIATING $709,488
FROM THE GENERAL FUND’S UNAPPROPRIATED FUND

BALANCE
PAGE 8
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NEW BUSINESS
ITEM 2

2. AUTH

ORIZE THE CITY MANAGER TO ENTER INTO A FUND

TRANSFER AGREEMENT WITH THE LOS ANGELES COUNTY

FLOOD CONTROL DISTRICT FOR THE SAFE, CLEAN WATER

PROGRAM
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Municipal Program
Agreement No. ___ _
http://www.calhr.ca.gov/employees/Pages/travel-reimbursements.aspx. Reimbursement will be at the State travel amounts that are current as of the date costs are incurred by the Municipality. No travel outside the Los Angeles County Flood Control District region shall be reimbursed unless prior written authorization is obtained from the Program Manager.

B-29. Unenforceable Provision
In the event that any provision of this Agreement is determined by a court of competent jurisdiction to be unenforceable, the parties agree that all other provisions of this Agreement have force and effect and shall not be affected thereby.

B-30. Withholding of Disbursements and Material Violations Notwithstanding any other provision of this Agreement, the District may withhold all or any portion of the SCW Program Payment for any Fiscal Year in the event that:

1. The Municipality has violated any provision of this Agreement; or

2. The Municipality fails to maintain reasonable progress in achieving SCW Program Goals, following an opportunity to cure.

3. Failure to remain in Good Standing, described in Section B-26 of Exhibit B.

4. Failure to submit annual reports on meeting sew Program Goals.

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INFORMATION ONLY
ITEM 3

3. FINAL REPORT FOR THE AUDIT OF FLEET MANAGEMENT

PRACTICES
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PAGE 43
Audit of Fleet Management Practices
Report 24-PW-001
Office of the City Manager
Internal Audit Division

ATTACHMENT A
PAGE 44
Of
fice of the City Manager
DATE:

December 11, 2024
TO: Miguel Márquez, City Manager
Brenda Harvey-Williams, Assistant City Manager
Greg de Vinck, Public Works Director
FROM: Ruthe Holden and Steven Andersen, Internal Audit Division SUBJECT: Audit of Fleet Management Practices
As part of our FY 2024-2025 Audit Plan, Internal Audit conducted an audit of the Fleet Management practices. Based on our audit, we identified 10 issues that need to be addressed, of which seven are considered high priority and three are medium priority. There are 25 recommendations associated with these 10 findings which should when implemented strengthen internal controls. Six issues were corrected during the audit and management has agreed to implement corrective actions that will mitigate the risks associated with the issues identified in the report. A description of our finding prioritization is in Appendix A on page 25.

Complete management responses to audit recommendations and corrective actions are included in Appendix B beginning on page 26. Appendix C, the Summary of COSO Internal Control Framework, is on page 38.

We would like to thank the Public Works department for their cooperation and timely assistance to conduct this audit.
cc: Alex Souto, Deputy City Manager
Matthew Hawksworth, Finance Director
Phillip Leclair, Chief Information Officer
Grace Wu, Public Works Administrator, BSFMD
Dan Adema, Public Works Superintendent, BSFMD
Eduardo Vasquez, Management Analyst IV, BSFMD
PAGE 45
Audit of Fleet Management Practices
Internal Audit Division
City Manager’s Office 1 24-PW-001
Executive Summary

1. Reason for the Audit
Included in the FY24-25 audit plan based
on issues and concerns discussed during
the annual city-wide risk assessment.

2. Background
Fleet Management reports to Building
Systems and Fleet Management, a
division of the Public Works department.

Fleet Management is responsible for
preventative maintenance, repair and
replacement of city vehicles and
equipment. Fleet Management also
manages the gasoline, diesel, and CNG
fueling systems including billing to
respective departments that use city fuel.

3. Objectives
To evaluate Fleet Management’s internal
controls related to their primary
responsibilities and benchmark
performance against industry best
practices.

4. Scope
Based on our assessment of risk in Fleet
Management, we focused on the
following areas:
 Effective practices over preventative
maintenance and repairs of vehicles
and equipment, including adequate
internal controls, and
 Adequacy of internal controls over
fuel management and billing
practices.

5. What We Found
Based on our audit, there are seven high risk
issues and three medium risk issues that
should be addressed to strengthen internal
controls, improve operations and increase
transparency with Fleet customers.

The high-risk issues identified are:
 Ineffective procurement process, and
safety recall process,
 Excessive system administrators
assigned,
 Inaccurate rates & factors and tracking
of manually logged fuel,
 Underutilization of existing systems, and
 Lack of performance measures

6. What We Recommend
The 25 recommendations include:
 Enforcing compliance with city
procurement & vendor payment
practices,
 Instituting a more effective process for
safety recalls,
 Limit access to systems based on need,
 Calculate rates & factors on current data,
 Increase controls over fuel usage &
bi
lling,
 Increase training & usage of systems &
correct missing or incorrect data,
 Institute effective performance
measures,
 More timely charges to customers, and
 Increase oversight of inventory parts
discrepancies
PAGE 46
Audit of Fleet Management Practices
Internal Audit Division
City Manager’s Office 2 24-PW-001
Reason for the Audit
The audit was included in the FY 2024-2025 audit plan to evaluate the effectiveness of internal controls incorporated into vehicle maintenance and repair practices as well as management of the city’s fueling systems. Effective fleet management is crucial for ensuring efficient public services, minimizing costs, maximizing vehicle lifespan, promoting safety, and complying with environmental regulations. Strong internal controls over fuel management are important to prevent or deter theft.

Background
Building Systems and Fleet Management Division (BSFMD) is part of the Public Works department. BSFMD is responsible for building maintenance, housekeeping, security services, fleet maintenance and vehicle replacement. Fleet maintenance has 21 FTEs reporting to a Public Works Superintendent, who reports to the Public Works Administrator of BSFMD.

Fleet maintenance’s primary responsibilities are preventative maintenance, replacement, and repair of vehicles and motorized equipment to minimize vehicle downtime and maximize police and fire availability to protect the city. Fleet maintenance is organized into three fleet maintenance sections and one parts section. The three fleet maintenance sections are:

1. General Fleet

2. Safety Fleet, and

3. Refuse and Sanitation Fleet.

Work orders completed by Fleet Management during the two-year audit period FY23 through FY24 are as follows:

Fleet Management Shop FY23 FY 24 Total
General Fleet Shop 2,027 2,498 4,525
Safety Shop 1,081 1,016 2,097
Sanitation 808 892 1,700
Total 3,916 4,406 8,322
Flee
t Maintenance uses FASTER as a fleet management system to provide management of assets, parts inventory, work order generation, preventative maintenance, reporting, and department billing. BSFMD recently upgraded to the FASTER web version, to use the more up to date version of the software and to utilize a more user-friendly interface.

Fleet Maintenance is responsible for submitting and tracking warranty claims. Detailed warranty information is incorporated into FASTER by vehicle number. When a work order is issued in FASTER, the warranty information is displayed. If it is determined that a specific vehicle repair falls within the terms and conditions of a warranty claim, FASTER can track the outstanding claim and warranty costs recovered. The warranty claim is coordinated by the Fleet PAGE 47
Audit of Fleet Management Practices
Internal Audit Division
City Manager’s Office 3 24-PW-001
Superintendent. If a part fails after being installed in a vehicle or piece of equipment, it is returned to the parts storeroom and the history is researched. If the part is found to still be under warranty, the parts technician will initiate a warranty claim. Defective parts are returned in accordance with the vendor’s warranty procedures and the claim is tracked in FASTER.

BSFMD is also responsible for fuel purchase and management. BSFMD currently utilizes Gasboy’s EKOS Fuel Management System. EKOS is a cloud-based platform that provides Fleet personnel with visibility of fleet equipment, fuel management processes, fuel inventory monitoring, and reporting. BSFMD uses EKOS to manage each of the four fuel sites from one central point. BSFMD also uses Gasboy’s Fuel Point Plus, an automatic vehicle identification RFID fueling solution. A fuel ring (which will be replaced with a fuel cube) is mounted on to the vehicle next to the fuel inlet, enabling fueling authorization for that vehicle at city fueling islands when the nozzle is inserted into the fuel tank. Key fobs are also issued to certain city personnel, which allows them to fuel other containers, such as gas cans. This system was installed to increase accountability and reduce the risk of fraud. Data from EKOs system is downloaded monthly into FASTER to calculate the amounts to charge back to Departments based on their fuel use and fleet management services.

PAGE 48
Audit of Fleet Management Practices
Internal Audit Division
City Manager’s Office 4 24-PW-001
Objectives
The objectives of this audit are to:

1. Identify risks and assess controls related to fuel management, and

2. Assess risks, controls, and Fleet Management performance related to vehicle repair and maintenance.

Scope
The scope of work included FY2023 and FY2024 for both objectives. The audit focused on the preventative maintenance and vehicle repair practices, as well as the fuel program. The vehicle replacement program was not included in the scope of this audit.

Methodology
The methodologies used to audit fleet management, and fuel management are as follows:
 Review industry best practices to develop benchmark criteria  Review city policies and procedures for adequacy compared to benchmark criteria and to determine if Fleet Management practices are compliant with city policies.  Review systems access controls for compliance with Department of Information Technology (DoIT) policies.
 Evaluate the effective use of performance measures and related accountability at both the operational and individual level.
 Evaluate the effectiveness of current measures to track vehicle maintenance costs that have a significant higher or lower impact to the city.
 Determine the extent to which the process for determining Internal Service Charges accurately captures Fleet Management expenses.
 Evaluate the effectiveness of sourcing processes in securing best value for the organization.  Determine the extent to which work performed under invalid (e.g., expired or no more funds) contracts or Purchase Orders impacts the city.
 Evaluate the projected readiness of the fueling and maintenance infrastructure to support the city and state's goals of reducing carbon emissions.

This audit was conducted in accordance with the standards promulgated by the Institute of Internal Auditors (Standards). These Standards encompass such matters as independence, objectivity, proficiency of staff, due professional care, the scope and performance of work activities, and the management of the internal auditing function. We believe that our work provides a reasonable basis for the reported issues, conclusions, and recommendations.

PAGE 49
Audit of Fleet Management Practices
Internal Audit Division
City Manager’s Office 5 24-PW-001
Overall Results
The Fleet Management Division of the Department of Public Works strives to provide a high level of service for fleet maintenance and repairs for city vehicles and related equipment, as well as vehicle replacements for many departments. Fleet Management’s technicians successfully maintain a wide range of vehicles and equipment, ranging from mowers to light electric vehicles to police cruisers to large fire and sanitation trucks. We did find, however, ten issues with 25 recommendations to improve Fleet Management’s operational effectiveness.

There are seven issues categorized as high risk and three issues categorized as medium risk.

SECTION 1: INEFFECTIVE PROCUREMENT PROCESS
The Competitive Bidding and Purchasing Ordinance P.M.C. § 4.08 has established expenditure thresholds that determine which procurement procedures are used. The current purchasing thresholds and their requisite procedures are:
 Up to $10,000 a single quote is required (formerly $3,000)  Over $10,000 up to $75,000 is an informal selection requiring three quotes (formerly up to $25,000),
 Over $75,000 a formal solicitation is required, and
 Over $250,000 City Council approval is required, a formal solicitation is required, or exemption approved by City Council (formerly $75,000).

A formal solicitation in the context of Pasadena’s Municipal Code and Charter refers to a Competitive Bid or a Competitive Selection process. Formal solicitations are designed to ensure that taxpayer money is spent efficiently and ethically while meeting city’s operational needs.

Pasadena Municipal Code 4.08.030 states that when the material or service is in fact a single purchase, it shall not be divided into parts for the purpose of reducing the amount of the contract below the sum of $75,000 (formerly $25,000).

Finding 1: Fleet Management’s current procurement practices are not effective and do not comply with city policies
Risk Rating: High
Fleet Management has not been complying with the city’s Purchasing Handbook or Pasadena Municipal Code requirements. This has resulted in:

1. Vendor invoices not being paid in a timely manner,

2. Vendors directed to work on purchase orders or contracts either expired or with no remaining funds,

3. Work delays due to inadequate procurement planning, and

4. Multiple $24,995 purchase orders for similar services to the same vendors.

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Audit of Fleet Management Practices
Internal Audit Division
City Manager’s Office 6 24-PW-001

1. Vendor Invoices not Being Paid in a Timely Manner
The city’s Manual of Personnel & Administrative Rules (Manual) states that one of the city departments’ roles is to “Ensure invoices are received and correctly coded with required information for Accounts Payable processing within 30 days of receipt of good or service”. The Manual also states that “Invoices should be approved for payment by departments as soon as the invoice or the goods / services are received and accepted. To help ensure payment is made timely, this approval must be no later than five (5) calendar days from receipt of invoice documents by the department”. Finally, the Manual states that “Departments must have a valid purchase order or contract with available funds and budget to ensure prompt payment of invoices”.

For the past several years, Fleet Management has consistently not extended or replaced expiring contracts in a timely manner. In addition, Fleet Management does not accurately track spending on open purchase orders, resulting in considerable late payments to vendors, including Minority Business Enterprise (MBE) and Pasadena vendors.

At the start of FY 2025 Fleet Management had 516 invoices that had not been coded for over 30 days, for a total of $332,040, payable to 22 vendors. These delays were due to expired contracts or purchase orders without available funding. 338 of these invoices were over 90 days old. Eight of these vendors, for which Fleet Management had late invoices for $113,092, were identified as Minority Business Enterprises (MBEs) in the city’s financial system. One of these MBEs was a Pasadena business, for which Fleet Management had $51,529 in late invoices. As of October 1, 2024, two of the above-referenced MBEs still had five aged invoices still unpaid, for a total of $14,554.

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Audit of Fleet Management Practices
Internal Audit Division
City Manager’s Office 7 24-PW-001

2. Vendors Directed to Work on Purchase Orders or Contracts Either Expired or with no Remaining Funds.

At the start of FY 2025 Fleet Management had 495 late invoices from 12 vendors, for a total of $239,423, for materials or services received after the contract expiration date or with insufficient funds on the Purchase Order or contract. In addition:
 One vendor was coming onto city property multiple times a week to perform state- mandated brake, steering, suspension, and tire inspections on vehicles for 245 days without a signed contract or receiving payment.
 Earlier in 2024, an MBE was performing maintenance on the city’s CNG refueling station for over three months with no funds remaining on their purchase order. Later this year, the same vendor performed maintenance for over three months on the city’s CNG station with no purchase order or contract.
 A towing vendor continued to provide tow services for city vehicles for two months after its contract expiration in April 2024.

Work done after purchase order or contract expiration, whether onsite or not, creates a potential liability issue for the city.

3. Work delays due to inadequate procurement planning
16 Police Department patrol vehicles were delivered to the city in May and July of 2024. While Fleet Management had been aware of these vehicles’ arrival in the Fall of 2023, they have been unable to outfit these vehicles in a timely manner. While one vendor had adequate contract funding, they had an eight-month work backlog and could not start the work in a timely manner. As of September 2024, only three vehicles had been outfitted and the timeline for outfitting the remainder will likely extend into the Spring of 2025.

4. Multiple $24,995 Purchase Orders for Similar Services During the FY 2023-24 audit period, Pasadena Municipal Code § 4.08.030 stated that “When the material or service is in fact a single purchase, it shall not be divided into parts for the purpose of reducing the amount of the contract below the sum of the $25,000 1”. In Fiscal Year 2024, Fleet Management had 30 purchase orders for $24,995 with eight vendors that were for similar work. In Fiscal Year 2023, Fleet Management had 30 purchase orders with five vendors for similar work. Proper planning for parts and services, and the creation of multi-year contracts, would reduce or eliminate these duplicative $24,995 purchase orders.

Recommendation 1.1: The Director of Public Works should set and enforce maximum number of days for coding and processing invoices in the AP Processor so that vendors are paid within 30 days.
1 Am
ended to $75,000 per City Ordinance No. 7428, § 6, 7-15-2024 PAGE 52
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Recommendation 1.2: The Director of Public Works should develop processes, related tools, and individuals responsible to track spend rates on open POs and contracts. Vendors with POs/Contracts that have expiring dates or funds should be notified to stop work before contract dates or amounts are exceeded.

Recommendation 1.3: The Director of Public Works should include performance metrics related to BSFMD purchasing in the BSFMD Administrator’s performance evaluation to ensure compliance with city procurement policies and practices.

Recommendation 1.4: The Director of Public Works should require the BSFMD Administrator to work with Public Works Administration Services Division staff to plan annual procurement activities more effectively to ensure that vendors contracts or POs are planned for the appropriate annual estimated need and issued prior to the start of the fiscal year, so that Fleet Management can complete their work in compliance with city procurement policies.

MANAGEMENT RESPONSE:

The Department has undertaken significant efforts in FY 2025 to create standard operating procedures (SOP) to bring BSFMD fully into compliance with the City’s Purchasing Handbook and PMC requirements. A plan of action has already been initiated with added support from the Administrative Services Division (ASD) to update BSFMD’s procurement workflows. ASD and BSFMD staff are currently meeting weekly to discuss procurement needs, potential improvements, and to implement changes.

As of November 2024, ASD and BSFMD staff have consolidated 33 types of services to create bid specifications for 15 multi-year contracts. Historically, each of these services has generated several purchase orders per year, with 109 purchase orders in total over three years. By consolidating and implementing multi-year contracts, staff has significantly lowered the number of $24,995 purchase orders expected to be opened over the next five years. This consolidation project will continue through FY 2025 with an expected completion of June 2025; in addition to replacing current reoccurring purchase orders with new contracts, where feasible, and setting up procurement processes for FY 2026 and beyond. This project will also lead to the implementation of standardized workflows, assigning specific responsibilities to BSFMD staff as appropriate and providing detailed internal timelines within which the work is expected to be completed.

BSFMD staff have developed an SOP for coding and processing invoices in the AP Processor to ensure all vendors are paid within 30 days. Standard response and turnaround time to not exceed 12 days for processing invoices, purchase orders, and contracts before final submission to Accounts Payable and Purchasing. Expected implementation of this SOP is March 2025.

ASD has provided BSFMD with a contract and purchase order tracking tool that gives details on each active contract and purchase order. The BSFMD Management Analyst IV will utilize this tool to review open contracts and purchase orders on a monthly basis. The Director of Public Works has also sent clear direction to the Department, reiterating that vendors are explicitly PAGE 53
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forbidden from performing work for the City without an active purchase order or contract.

BSFMD staff will utilize contract tracking tools to guide notifications to vendors to cease work when expiration dates are approaching.

SECTION 2: INEFFECTIVE VEHICLE SAFETY RECALL PROCESS
A car gets a recall when a manufacturer or the National Highway Traffic Safety Administration (NHTSA) identifies a safety defect. The manufacture may voluntarily issue a recall if they identify a defect, or the NHTSA may announce a recall if they believe a car does not meet minimum safety standards. Consumers may report safety issues to the NHTSA, which may open an investigation if enough people report similar issues. By law, the manufacturer must pay for the repairs if the recall is announced 10 years or less after the date of the car’s original purchase date. When a car has been recalled, the manufacturer must send official recall notices to the owner’s address on record at the local registry of motor vehicles. For the vehicles owned by the City of Pasadena, the recall notices are sent to City Hall not to Fleet Management at the City Yards. There are online recall search engines such as NHTSA’s website (https://www.nhtsa.gov/recalls) or other publicly available such as CARFAX and Kelly Blue Book that can be used to search for recall notices by a vehicle identification number.

Finding 2: Fleet Management’s current process for identifying cars with safety recalls is ineffective.

Risk Rating: High
When Fleet Management brings a vehicle into a dealer, the dealer will check for open recalls as part of servicing the vehicles. However, Fleet Management is not currently proactively checking for open recalls on city vehicles. Fleet Management should proactively search for open recalls on a periodic basis rather than relying on recall notices being forwarded to them in city interoffice mail.

Vehicle recalls should be timely addressed by Fleet Management to ensure workplace safety for city employees. During the FY23-24 audit period, Fleet Management completed work on 91 vehicles recalls out of 850 active fleet vehicles.

As of August 28, 2024, however, an additional 176 open fleet vehicle recalls have not been addressed. Of these, 160 were safety related. These include 20 airbag-related, 38 fire-related, and four seatbelt-related recalls.
116 vehicles have had an open safety-related recall for over one year, and 75 of these vehicles have had an open safety-related recall for over two years. 42 vehicles have had an open safety- related recall for over three years as pictured in the graph below.

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Aging of Open Safety-Related Recalls
Recommendation 2.1: The Public Works Director should require the BSFMD Administrator to develop a written procedure requiring staff to periodically check online for recalls related to all city vehicles. The written procedures should include the following:

1. Maximum time before vehicle is required to be corrected, including escalation procedure if vehicle is not turned in timely by city staff for repairs (e.g., Turn off fuel cube)

2. A decision matrix on whether the vehicle should be taken out of use if parts are not readily available to repair it depending on the severity of the issue & safety concerns for city staff.

Recommendation 2.2: The Public Works Director should require the BSFMD Administrator to develop performance metrics related to number of vehicles with safety related recalls, type of recall and number of days outstanding since recall was issued on that vehicle. These metrics should be distributed to the Assistant City Manager, the Public Works Director, the Safety Officer, and the Deputy City Manager.

MANAGEMENT RESPONSE:

The Department is committed to ensuring all vehicle operators are driving vehicles that meet Federal safety standards. As of November 2024, BSFMD staff has drafted and implemented an SOP setting up routine online checks for safety recalls for City vehicles. This involves analyzing recall alerts through the National Highway Traffic Safety Administration’s SaferCar portal PAGE 55
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monthly and setting up automatic, real-time alerts via push notifications and emails for recalls on City fleet vehicles. This analysis will feed into a report that will be reviewed weekly between the Fleet Superintendent and Supervisors. The SOP also outlines an escalation protocol and decision matrix that will be vetted and approved through the City’s Safety Office and Risk Management group for when vehicle operators do not comply with requests to bring in their vehicle for recall work. BSFMD has opened a purchase order that allows manufacturers to perform onsite recall service at the City Yards. All outstanding vehicle recall services are expected to be completed by March 2025.

SECTION 3: LIMIT SYSTEM ADMINISTRATOR ACCESS & REDUCE USE OF GENERIC ROLES Fleet Management uses the FASTER application for asset (vehicle) management, maintenance work order tracking, subcontract tracking, inventory management, and calculation of customer billing for both fuel and maintenance. Users are divided into seven roles intended to match their business needs. Fleet Management used Gasboy in the past to manage fuel consumption, and now uses EKOS for fuel management.

The city’s Administrator Access Policy uses the "Principles of Least Privilege", it states in part, that:
 Administrative access shall only be assigned when necessary and required to complete work for which the administrator is responsible, and not for convenience.  Administrator access to the city's computing resources shall follow the Principles of Least Privilege, using a separate account from a user’s regular “user” account where technically feasible.
 The assignment of administrative privileges shall be documented by the IT resource owner.
 The IT resource owner should perform an annual audit of administrative privileges and ensure assignment of privileges is still warranted and in accordance with this policy.

Finding 3: User access to FASTER and EKOS should be limited based on need System Administrator access to FASTER and EKOS
Four Fleet Management users (and one in the Department of Information Technology and one FASTER support account) have full system administration access to FASTER. This allows them to make many changes, including user permissions, billing, maintenance records, asset records, and performance measures.

The FASTER support account is a generic user account not tied to a specific individual. Setting appropriate limitations around system administration access is critical to maintaining confidentiality, integrity, and availability of system data.

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individuals. The current fuel management system, EKOS, has two system administrator roles assigned to Fleet Management staff.

Both systems, FASTER and EKOS, have individuals assigned to the System Administrator role whose responsibilities in the system do not need that level of access.

Inventory Adjustment access to FASTER
Five users have roles which allow adjustments of FASTER inventory, including one generic account not assigned to an individual. The six FASTER System Administrators also have inventory adjustment access. Limiting access to individuals that need to maintain the parts inventory is critical to maintaining accurate parts inventory. Currently the number of individuals that have access to parts inventory in FASTER exceed the number of individuals that need access.

Recommendation 3.1: The Public Works Director should limit FASTER and EKOS System Administrator access to one individual from Fleet and after consulting with DoIT, one DoIT staff person. Reassign other current users with System Administrator access to other more appropriate roles based on their usage needs.

Recommendation 3.2: The Public Works Director should lock both FASTER company access and generic user access to the FASTER system. FASTER accounts should be unlocked when they need access to the system. Generic accounts should be assigned to specific city individuals if they are unlocked.

Recommendation 3.3: The Public Works Director should assign EKOS System Administrator access to either BSFMD Management Analyst IV or appropriate staff from DoIT.

MANAGEMENT RESPONSE:

BSFMD staff has completed restructuring FASTER access to ensure the security of the information contained in the system. The roles have been limited based on how the system is used by staff members and includes a power-user role, a system administrator role, and a superintendent user role. Power-users will include two Management Analysts. The system- administrator role will be assigned to the supervising Management Analyst and a Senior IT Analyst from DoIT. The superintendent role will include the Fleet Superintendent. All other users will be generic users with limited access in defined roles based on utility. By the end of March 2025, these roles and permissions will be mirrored in the EKOS system and users assigned or reassigned appropriate roles based on their position needs. The restructuring of FASTER and EKOS will drastically reduce the number of system administrators with access to fleet management systems and increase the number of restricted, generic users.

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SECTION 4: INACCURATE RATES & FACTORS RESULTING IN OVER/UNDERBILLING Internal service funds are used to account for the financing of goods and services provided by one city department to another or to other governmental units on a cost reimbursement basis.

The city uses internal services funds to account for its computing and communication, building maintenance, fleet maintenance, fleet replacement, benefits, worker’s compensation, general liability, and 311 call center services.

Fleet Management has two separate funds:
 Fleet Replacement Fund – to account for the procurement of city vehicles, and  Fleet Repair and Maintenance Fund – to account for the repair and maintenance of city vehicles and fuel used by city vehicles and equipment.

Finding 4: Rates and factors used to bill other city departments are not accurate Risk Rating: High
In 2018, the Fleet Management Operations Manager worked with Finance to set up an appropriate hourly rate for maintenance technician billing to fleet customers. Fleet Management and Finance reviewed FY 2017 and FY 2018 payroll hours, as well as the FY 2019 Fleet budget. According to Finance staff, prior to this analysis, Fleet Management was using Vehicle Replacement Fund dollars to partially fund its operations. Fleet Management and Finance determined a rate of $113 per hour to recover fleet costs and added $7 per hour, for a total of $120 per hour, with the intent of transferring any surpluses to the Vehicle Replacement fund. This rate was implemented in FY 2019. Fleet Management also charges 30 percent of the indirect shop labor at the $120 per hour rate. In addition, Fleet Management charges the following markups:
 30 cents per gallon for gasoline, diesel, and compressed natural gas (CNG)  An additional 70 cents per gallon for CNG
 20 percent on subcontracted services
 40.5 percent on purchased parts.

An assumption driving these rates was that any surplus generated from Fleet Maintenance billings would be credited to Fund 503 (Fleet Replacement) every fiscal year until BSFMD performed a comprehensive analysis to establish new rates. Beginning in FY 2019, Fleet Maintenance has transferred $2.5 million in surplus funds to the Fleet Replacement Fund, including $1.6 million in FY 2023. Fleet Management has not performed any recent analyses to justify its current billing rates.

Incorrect Billing Rates
Fleet Management incorrectly billed customers for purchased fuel and parts. Specifically, Fleet Management has:

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1. Structured its billing process so that departments were overbilled for CNG fuel

2. Used incorrect billing calculations so that departments were underbilled for unleaded gasoline and diesel fuel

3. Does not routinely include sales tax in unit rates for parts

1. Fleet Management sets the transfer charge for CNG based on the prior month’s cost per gallon. Fleet Management adds two markups; a 30 cent per gallon for the overhead related to operating the fueling infrastructure, and an additional 70 cent per gallon that BSFMD staff stated was to fund the future replacement of the CNG fueling infrastructure. The CNG fueling station was installed in 2009 and expanded in 2017. The 70 cent per gallon markup has not gone into any replacement fund, but rather has funded Fleet Management’s general operations. Over the FY 2023-24 audit period, Fleet Management billed customers an additional $500,323, or 24 percent, as a result of this additional 70 cent per gallon markup.

2. Fleet Management sets the transfer charge for gasoline and diesel fuel based on the prior quarter’s cost per gallon. In calculating the prior quarter’s cost per gallon, Fleet Management included only the cost of fuel and omitted any taxes. By omitting taxes in the cost per gallon calculation, Fleet Management underbilled customers by a total of $773,775 over the FY23-24 audit period:
 $672,276, or 17 percent, for unleaded gasoline
 $111,499, or 19 percent, for diesel fuel

3. Fleet Management charges customers a 40.5 percent markup on purchased parts. Per BSFMD staff, this markup includes 10.5 percent for sales tax; the rest of the markup is to recover overhead. Internal Audit took a judgmental sample of parts invoices and related costs entered in FASTER and found that 48.6% of entered parts (36 of 74) also included sales tax, therefore double-counting sales tax for some parts. Parts should be entered into FASTER with the unit rate that includes all related charges including sales tax and delivery charges. Markup added to parts should only include overhead not directly related charges such as sales tax.

Recommendation 4.1: Annually, the Public Works Director should review all rates and factors billed by BSFMD to verify they reflect actual costs from the prior year during the budget process.

Recommendation 4.2: In conjunction with Finance, the Public Works Director should analyze the replacement cost of all fueling facilities and calculate an appropriate markup to fund forecasted replacement and maintenance needs. Funds accumulated from this additional markup should be set aside for future infrastructure needs and not used to fund current operations.

Recommendation 4.3: The Public Works Director should Immediately change the process of charging gas and diesel to include all taxes paid on fuel purchased.

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Recommendation 4.4: The Public Works Director should immediately change the process of entering parts unit rates to include all taxes and delivery charges paid on parts.

MANAGEMENT RESPONSE:

The Public Works Department will develop a calculation that will determine an appropriate markup for all types of fuel, labor, subcontractors, and parts. This new markup will be used to fund forecasted replacement and maintenance needs as well as indirect operational costs. With support from the Finance Department, BSFMD will develop an accounting process to accumulate funds from the portion of the markup intended for future infrastructure needs.

These funds will be specifically tracked and separated from other operational funds. The new markup will be reviewed by BSFMD on an annual basis during the budget development process, with expected implementation no later than June 2025. Additionally, the Fleet Superintendent has already implemented a new procedure for Parts Technicians that will ensure sales tax is being consistently applied on all part unit rates entered into the FASTER system.

SECTION 5: INACCURATE TRACKING OF MANUALLY LOGGED FUEL USAGE & STRONGER

CONTROLS OVER USE OF FUEL FOBS
Fleet Management uses a combination of fuel rings, fuel cubes, and fuel fobs to authorize fueling of city vehicles and to assist in tracking and billing for fuel usage. Most vehicles contain fuel rings or fuel cubes, which have a sensor that provides the vehicle asset number to the EKOS/Gasboy fuel management system. Both fuel rings and fuel cubes are mounted at the gas filler area.

Fuel fobs are used to pump gas when a piece of equipment does not have a fuel ring/fuel cube attached to it. Fleet Management assigns fuel fobs to individuals or departments. Fleet Management bills the fuel fob holder’s department for fuel each month.

Finding 5: Stronger controls needed over manually logged fuel and fuel fobs Risk Rating: High
Fuel Cubes have stronger internal controls than Fuel Rings Fuel cubes provide a more solid theft deterrent than fuel rings, as they cannot be removed from the vehicle or transferred to another vehicle without disabling the unit. Over the last two years, Fleet Management has been replacing fuel rings with fuel cubes when fuel rings are defective or no longer work, as well as on new vehicles. Fleet Management has installed 366 cubes on vehicles through September 10, 2024. Fleet Management should accelerate the replacement of fuel rings with fuel cubes so that the potential for gas theft is minimized.

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Fuel Fobs
Of the 36 fuel fobs issued, Fleet Management could not determine the users of three of the fuel fobs in use. Fleet Management had to turn off the fobs for these users to be identified. The current process to issue fuel fobs is a department requests the Fleet Superintendent to provide a fuel fob to an individual. Fleet Management does not have any policies or customer agreements covering the use of or criteria for issuing fuel fobs. Section 2.Y.1.e of the City of Pasadena Manual of Personnel & Administrative Rules prohibits “Using City equipment, facilities, supplies or funds for purposes unrelated to City business”, which includes use of fuel fobs for personal use. It is in the city's best interest to have stronger internal controls related to the issuance and use of fuel fobs. As fuel fobs could easily be misused, Fleet Management should reinforce the city’s rules and commit customers in writing to appropriate use of fuel fobs.

Manually logged fuel usage
One fob is used by Fleet Management to provide fuel for vehicles or equipment with either no or inoperable fuel ring/cube. The Fleet Management attendant manually logs the employee, vehicle, and fuel used onto a paper worksheet. The fuel information in the worksheet can then be transferred to FASTER for customer billing.

Fleet Management only billed customers for 13 percent of the Diesel fuel, 13 percent of the unleaded fuel, and 16 percent of the natural gas that was manually logged, during the two-year audit period. Billing only occurred in five of 24 months. There is no documented process or owner for manually inputting fuel transactions into the FASTER system to facilitate billing. The result is that over $100,000 of fuel from manually logged transactions was not billed to customers over the FY23-24 audit period.

Recommendation 5.1: The Public Works Director should require BSFMD Administrator to provide a schedule for replacing all fuel rings on city vehicles with fuel cubes by the end of this fiscal year.

Recommendation 5.2: The Public Works Director should develop a policy including a customer service agreement for fuel fob usage, similar to the PCard program. The policy should establish strict criteria for who is allowed a fuel fob. The policy should require the department that has requested the fuel fob to monthly reconcile all fuel fob usage and notify BSFMD that usage complied with city policies.

Recommendation 5.3: The Public Works Director should develop a written procedure for billing for manually logged fuel usage that clearly documents the process for billing and requires a supervisory oversight and approval.

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MANAGEMENT RESPONSE:

As of November 2024, all billing to other departments for remaining gasoline transactions had been completed. To ensure fuel transactions are properly logged moving forward, BSFMD staff has drafted and implemented an SOP that provides step-by-step instructions on the manual fueling process and how to appropriately bill each fill-up. Staff has also reviewed the fleet inventory and confirmed that 505 of the 805 vehicles now have fuel cubes installed. A workplan has been implemented and work has begun to replace all remaining fuel rings with fuel cubes by June 2025. Staff has also drafted a fuel fob customer service agreement to be signed by all fuel fob users. An accompanying policy is currently being drafted that establishes strict criteria for who is allowed to hold a fuel fob, how to correctly use the fob, and requires the fob user’s department to reconcile and report all fuel usage on a monthly basis to BSFMD. The draft is being modeled on the City’s Procurement Card policy. Once the policy is completed, a memo will be sent from the Public Works Director to all Departments with information about the change to fuel usage, and customer service agreements will be sent to all vehicle operators.

Expected rollout of the policy and service agreement is June 2025.

SECTION 6: UNDERUTILIZATION OF FASTER SYSTEM
In 1995, Fleet Management purchased an on-premise FASTER asset management and work order system known as ‘FASTER Win’. In 2018, Fleet Management purchased the upgrade to the latest cloud-based version of FASTER. The cloud conversion began in 2019 and was completed in 2022. Fleet Management has used FASTER for asset (vehicle) management, maintenance work order tracking, subcontract tracking, inventory management, and calculation of customer billing for both fuel and maintenance.

Finding 6: Fleet Management does not utilize all of FASTER’s capabilities Risk Rating: High
Fleet Management has either not utilized or underutilized the capabilities of FASTER in running its operations. Specifically, Fleet Management could improve its use of FASTER in the following areas:
 Shop configuration
 Preventative maintenance scheduling and tracking
 Customer visibility of work order status and information  Access throughout the shops.

Shop Configuration
A limitation of Fleet Management's current use of FASTER is that it is configured for only two shops, Police and Other. Fleet Management actually has three shops (Safety Fleet, Refuse & Sanitation Fleet, and General Fleet), which causes difficulty in obtaining performance measures PAGE 62
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and work order activity for the non-safety-related shops. Configuring FASTER with three shops will allow each shop to better manage their operations and track their performance measures.

Preventative Maintenance Scheduling and Tracking
Preventative maintenance is not being logged into FASTER for a significant percentage of vehicles. Regular PM of vehicles is essential to long vehicle life and minimizing unplanned repair costs. Fleet Management’s Equipment and Fleet Management procedures states that Preventive Maintenance Inspections (PMIs) are required as part of all new vehicle warranties and are performed per the manufacturer's recommendations for service types and intervals.

The procedures also state that Fleet Management uses the FASTER PM Notification program to send email notifications to department vehicle liaisons that PMs are due. BSFMD staff stated that this program had been configured but not fully implemented. Fleet Management does not use FASTER to effectively schedule vehicles for PM, and many vehicles have not undergone PM for a significant period of time.

An impact of this inadequate configuration is that Fleet Management does not proactively schedule PM with customers for vehicles owned by the city. 175 of 722 eligible vehicles (24%) had no PM logged in FASTER in FY 2023. 275 of 774 eligible vehicles (36%) had no PM logged in FASTER in FY 2024. 110 vehicles had no PM logged in FASTER for the two-year (FY 2023 to FY 2024) audit period. For the limited number of vehicles with scheduled PMs, 105 vehicles are six months or more overdue for one of their scheduled PMs.

In Fiscal Year 2023, Fleet Management spent eight percent of labor hours on PM, and six percent in Fiscal Year 2024. This is much lower than the desired American Public Works Association benchmark of 50 percent of shop work hours performed on PM.

Customer Visibility of Work Order Status and Information Fleet Management has not provided customers with read-only access to the maintenance module of FASTER. As a result, both Fire and Police have set up parallel vehicle maintenance tracking functionality in their Lucity (Fire) and PSTrax (Police) systems. Customers lack real-time information as to repair status and related cost detail.

Access Throughout the Shops
Technicians can access FASTER through six computers in the Main Shop and one in the Safety Shop. Technicians in the Sanitation Shop must go to the Main Shop to access FASTER. Fleet Management could improve access to FASTER by providing ruggedized tablet computers for broader FASTER access.

Recommendation 6: The Public Works Director should require BSFMD to provide a schedule to implement the following recommendations:

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1. Reconfigure FASTER from two to three shops to reflect current shop operations

2. Work with DoIT on a process design and system utilization plan for FASTER to better utilize all of its features

3. Add training hours annually to the software license renewal so Supervisors receive annual training on the FASTER system

4. Revise the vehicle classifications and related PM definitions in FASTER to appropriately define required PM for electric & fuel powered vehicles, non-powered equipment, and specialty equipment (such as trash trucks & safety equipment) PM requirements

5. Update FASTER to include PM schedules for all vehicles, as well as warranty information for recently purchased vehicles. Quarterly, report performance measurements to the Public Works Director on completion of required preventative maintenance for all city vehicles and annually provide a report of all required preventative maintenance on city vehicles.

6. Fleet Management should set target days outstanding for all required vehicle maintenance and track monthly completion of required maintenance. Vehicles with outstanding maintenance should be reported to the Public Works Director when over 60 days late. Fleet should consider drafting a policy requiring shut off of fuel cubes for any vehicle with outstanding maintenance more than 60 days.

7. BSFMD should provide fleet customers with read only access to the maintenance portion of FASTER, so that customers can access real-time status information as well as maintenance and repair cost detail.

8. Fleet should explore switching to iPads at mechanics station for a more efficient means of entering data into FASTER at the three different buildings where mechanics currently work.

MANAGEMENT RESPONSE:

BSFMD has implemented a host of new policies and procedures to help staff more fully utilize the features of the FASTER system. The system has been expanded to cover three shops instead of two (General, Public Safety, and Sanitation). BSFMD is collaborating with DoIT staff to create a FASTER design and utilization plan, new performance measures, and expanded reporting capabilities. Annual training hours will now be assigned to all relevant BSFMD staff, and surveys will be distributed to identify competency and further training needs. Preventative maintenance schedules have been developed for all vehicles in the fleet with associated task lists added to each service. Preventative maintenance service information such as mileage is imported on an hourly basis from GPS devices in each vehicle. Utilizing an imported email distribution list in the FASTER system, preventative maintenance notifications will be sent to vehicle operators when a vehicle reaches the designated service interval. A monthly report on due maintenance will be reviewed by the Fleet Superintendent to determine which vehicles are delinquent on service. Non-compliance with preventative maintenance scheduling will now result in the deactivation of fuel cubes. All of the new policies and procedures related to utilizing the FASTER system are expected to be fully implemented by June 2025.

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SECTION 7: LACK OF PERFORMANCE MEASURES
The primary objectives of performance measures are to monitor progress towards goals, identify areas of improvement, evaluate effectiveness, inform decision-making, and drive continuous improvement by providing data on how well individuals, teams, or processes are performing against set standards. Performance measures are an important tool in accountability, identifying performance gaps and motivating and engaging employees.

The American Public Works Association, Top Ten Performance Measures for Fleet Managers, May 2015 lists the following top performance measures:

1. Developing Fleet Charge Back Rates

2. Preventative Maintenance

3. Measuring Fleet Availability and Downtime

4. Technician Time Measurements

5. Cost Per Meter Mile

6. Number of Repair Hours by Repair Type & Cost by Equipment in Class

7. Scheduled Repair Rate

8. Annual Parts Inventory Turns

9. Parts Demand Fill Rate

10. Customer Satisfaction
Finding 7: Fleet Management does not track or publish any performance measures Risk Rating: High
Fleet Management does not track or publish any operational performance measures. Without measures, it is difficult to determine specific areas needing improvement and to identify any gaps where additional resources may be required. The information to create several of these measures is configurable in FASTER. Desired measures configurable in FASTER include:
 Fleet availability, which measures the degree to which Fleet Management ensures the regular availability of vehicles to user departments. Availability rates should be highest for mission-critical departments.
 Inventory turns, which measures the number of times a fleet’s parts inventory is sold or used within a year’s time. This measures the appropriateness of the size and mix of parts inventory, as well as the effectiveness of parts management activities.  Technician productivity, which compares technician repair time to industry repair time standards and the hours for which they are compensated.  Scheduled versus unscheduled repairs, which seeks to minimize the high variance of unscheduled repairs and allows Fleet Management to develop a work plan to manage the majority of its resources in a cost-effective fashion.  Preventative maintenance (PM) tracking, which, if properly tracked, increases operators’ safety, reduces downtime, tracks warranties, and avoids costly repairs.

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Recommendation 7: The Public Works Director should direct BSFMD to provide a schedule identifying critical fleet performance measures, track these measures in FASTER, and report these measures to the Public Works Director quarterly.

MANAGEMENT RESPONSE:

The BSFMD Administrator, Management Analyst, and Fleet Superintendent will be collaborating with ASD staff throughout Fiscal Year 2025 to create specific operational and staff performance measures. Measures will be implemented to hold staff accountable to the responsibilities tied to each position, inclusive of administrative and operational staff. Target completion for these new performance measures is June 2025.

SECTION 8: TIMELINESS & LACK OF TRANSPARENCY FOR INTERNAL SERVICE CHARGES

BILLING
Internal Service charges are normally sent to Finance after month end as a journal entry to bill charges to the respective departments using Fleet Management’s fueling, maintenance and repair services.

Finding 8: Monthly billings are late and provide no backup to departments Risk Rating: Medium
Fleet Management bills its customers via Internal Service Charges (IS Charges) monthly. Fleet Management has consistently taken between two to over three months after the close of a month to bill its customers. The information for billing fuel and maintenance is available in FASTER at the end of each month. Per BSFMD, the Management Analyst in charge of billing waits for the prior month’s compressed natural gas (CNG) bill to compute the monthly CNG charges prior to billing. The delay in billing IS charges impacts customers’ ability to effectively forecast expenditures to determine if budget adjustments are needed.

Recommendation 8.1: The Public Works Director should require the BSFMD Administrator to establish written procedures for computing Internal Service charges, including:

1. Identifying Roles and responsibilities for individual staff involved in data generation and calculation.

2. Deadlines for completing the calculations so that they are charged to the departments no later than 45 days after month end.

Recommendation 8.2: The Public Works Director should require BSFMD to provide details of these Internal Service charges to the respective departments as soon as the charges are sent to Finance.

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MANAGEMENT RESPONSE:

BSFMD staff have developed and implemented an SOP that identifies the roles and responsibilities of staff involved in pulling billing data, calculating appropriating billing amounts, and routing bills to other departments. BSFMD staff will prepare billing by the 10 th of the month following the close of the previous month so charges can be posted by the Finance Department by the 15th. A monthly report with relevant backup documentation for all billed charges will be created and uploaded to a SharePoint site that will be accessible by appropriate staff in each department. The monthly report is expected to be implemented by March 2025.

SECTION 9: INACCURATE AND INCOMPLETE DATA IN FASTER
For any system the quality of the output (reports and metrics) is determined by the quality of the input. It is important to have accurate and high-quality data, which is both accurate and complete, to ensure reliable results.

Finding 9: FASTER data contains inaccurate or incomplete information Risk Rating: Medium
There is inaccurate or incomplete data in Fleet Management's FASTER system.

Fleet Management does not record all vehicle preventative maintenance schedules in FASTER.

Of 816 active vehicle assets in FASTER, 332, or 40.75%, did not have any PM schedules entered in FASTER. We note some of the larger exceptions in the table below:

Department/Division
Percentage of Vehicles
with no PM Schedule
Number of Vehicles with no
PM Schedule/Total Vehicles
Fire/Emergency Services 92.9% 13/14
Fire/Operations 78.1% 50/64
Police/Other 28.6% 2/7
Police/Patrol 78.5% 113/144
Public Works-RRR/Sanitation 90.8% 59 /65
Public Works/Engineering 50.0% 34/85
Fleet Management has also set up the FASTER PM task lists with a set of generic PM tasks for all classifications of vehicles, regardless of whether they are powered or not, or have electric power. Vehicles within a single classification can be either gas or electric powered. This has caused FASTER’s preventative maintenance flagging functionality to be unusable. As an example, the city’s basic FASTER PM-A definition calls for oil changes and air filter changes for electric vehicles and trailers.

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In addition, only nine of the 816 active vehicles have warranty information entered in FASTER.

Fleet Management does not consistently track which vehicles are under warranty, resulting in departments potentially being billed for repair costs which should be covered under warranty.

Also, 33 vehicles have either no or invalid Vehicle Identification Numbers in FASTER. This causes difficulty in correlating vehicles with fixed assets in the city's financial system, as well as quickly identifying vehicles in need of recall work.

Recommendation 9: The Public Works Director should require the BSFMD Administrator to put together a schedule identifying all data that needs to be cleaned up and who will be assigned to complete data cleanup with interim and final due dates for cleanup.

MANAGEMENT RESPONSE:

BSFMD staff will work with DoIT and the FASTER Technical Support Team to identify and/or develop quality control reports that can be used by the division for proper data management.

During this process, the FASTER Technical Support Team will be tasked with reviewing and scrubbing existing FASTER data to ensure that incorrect data is properly removed. BSFMD staff will conduct quarterly quality control analyses on the data in the FASTER system to ensure it remains accurate. As of November 2024, 95% of the vehicle warranty information has been reviewed and correctly logged in FASTER. Any remaining data not currently input into the system, such as missing VIN/asset numbers or incomplete maintenance schedules will be input by BSFMD staff by June 2025. The BSFMD Management Analyst will also refine the existing preventative maintenance program based on standards set by the American Public Works Association and industry leaders. An annual report will be created by BSFMD staff that will forecast anticipated preventative maintenance for all City vehicles, with progress reports submitted to the Public Works Director on a quarterly basis. The preventative maintenance program and associated reports is expected to be ready for implementation by June 2025.

SECTION 10: EXCESSIVE ADJUSTMENTS TO PARTS INVENTORY
Parts are received and entered by the two Parts Technicians into FASTER. Parts leave inventory when mechanics request parts through FASTER’s workorder system. There usually is a weekly cycle count by section which is reconciled with the inventory amount listed in FASTER. There is a full inventory count completed at the end of the fiscal year. There are no written policies and procedures documenting the practice of managing parts, completing inventory counts or reconciling discrepancies. In addition, the Parts staff do not utilize the min/max capabilities of FASTER.

Finding 10: Improve processes over managing parts inventory Risk Rating: Medium
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Over two fiscal years, 1,189 different parts either had negative or positive adjustments required to reconcile actual parts to data in FASTER. While the overall accuracy was in line with industry benchmarks, the value of positive adjustments, at $210,000, was over twice the value of negative adjustments, at $92,000. No follow-up is done to identify and correct the root cause of inventory adjustments.

Currently 11 users have access to adjust parts inventory including the Parts Technicians, individuals with System Administrator rights and a generic user that has not been assigned to an employee.

Recommendation 10.1: The Public Works Director should require BSFMD to the reduce number of users that can adjust inventory to the two Parts staff, the one individual assisting the Parts staff and one BSFMD System Administrator.

Recommendation 10.2: The Public Works Director should require the Fleet Superintendent to create an exception report for major inventory adjustments that is sent to the BSFMD Administrator with detailed reasons explaining the discrepancies.

Recommendation10.3: The Public Works Director should require Fleet Management to document policies and procedures related to best practices parts management.

Recommendation 10.4: The Public Works Director should require Fleet Management to implement min/max quantities in FASTER for all necessary parts.

MANAGEMENT RESPONSE:

As of October 2024, the excessive adjustments while tracking parts inventory has been fully addressed. BSFMD Parts Technicians have always been the only positions that have access to manage and modify parts inventory. The BSFMD Power Users and System Administrators will be given access for backup system management but will not be assigned to manage or modify inventory. No inventory adjustment will be made until the Fleet Superintendent is onsite and has been provided a valid reason for the adjustment. The BSFMD Administrator will review an inventory audit report on a monthly basis to address all adjustments and any potential discrepancies. This inventory audit report will be implemented by March 2025.

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Appendix A: Findings Risk Ranking Criteria
High Risk Medium Risk Low Risk
Potential significant
financial/operational losses to
the city
Weakness that could cause
moderate losses to the city
Control weaknesses exist but
are mitigated by other
controls
Significant internal control
weaknesses that are citywide
or affect a department’s
operations.

Internal control weaknesses
at a division or unit level or
non-compliance with
citywide policies
Controls which, if eliminated
or re-engineered, would
benefit productivity or
effectiveness
Violation of laws, regulations,
or municipal code/ordinance
Non-compliance with grant
requirements or other
contractual agreements
Opportunities for process
improvements or increased
efficiencies
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Appendix B: Management Response from Department

DEPARTMENT OF PUBLIC WORKS

MEMORANDUM
TO: Ruthe Holden, Internal Audit Manager
FROM: Gregory de Vinck, Director of Public Works
DATE: December 16, 2024
SUBJECT: Department of Public Works Response to Audit Findings Regarding the Fleet Section of the Building Systems and Fleet Maintenance Division The
Department of Public Works (PW) understands the significance of the internal audit findings contained in this report and is committed to making the necessary improvements to the Fleet section of the Building Systems and Fleet Management Division (BSFMD). PW management agrees with and accepts the recommendations noted in the Audit Report. In response to the audit findings, PW staff has performed an internal review of BSFMD’s procurement, financial, and fleet operations. PW analyzed the issue areas mentioned in the audit, identified where improvements have already been implemented, and created workplans for areas that still need to meet the recommendations of the audit report. From these analyses, the Department has drafted responses to each issue and corresponding set of recommendations. These responses provide a clear view as to what the Department has already done to address each audit finding and how the Department plans to satisfy any outstanding recommendations by the end of Fiscal Year (FY) 2025. For a detailed look at the Department’s response to each recommendation, see Attachment A – BSFMD Audit Response Matrix.

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Finding #1: Fleet Management’s current procurement practices are not effective and do not comply with City policies – High Risk
The Department has undertaken significant efforts in FY 2025 to create standard operating procedures (SOP) to bring BSFMD fully into compliance with the City’s Purchasing Handbook and PMC requirements. A plan of action has already been initiated with added support from the Administrative Services Division (ASD) to update BSFMD’s procurement workflows. ASD and BSFMD staff are currently meeting weekly to discuss procurement needs, potential improvements, and to implement changes.

As of November 2024, ASD and BSFMD staff have consolidated 33 types of services to create bid specifications for 15 multi-year contracts. Historically, each of these services has generated several purchase orders per year, with 109 purchase orders in total over three years. By consolidating and implementing multi-year contracts, staff has significantly lowered the number of $24,995 purchase orders expected to be opened over the next five years. This consolidation project will continue through FY 2025 with an expected completion of June 2025; in addition to replacing current reoccurring purchase orders with new contracts, where feasible, and setting up procurement processes for FY 2026 and beyond. This project will also lead to the implementation of standardized workflows, assigning specific responsibilities to BSFMD staff as appropriate and providing detailed internal timelines within which the work is expected to be completed.

BSFMD staff have developed an SOP for coding and processing invoices in the AP Processor to ensure all vendors are paid within 30 days. Standard response and turnaround time to not exceed 12 days for processing invoices, purchase orders, and contracts before final submission to Accounts Payable and Purchasing. Expected implementation of this SOP is March 2025.

ASD has provided BSFMD with a contract and purchase order tracking tool that gives details on each active contract and purchase order. The BSFMD Management Analyst IV will utilize this tool to review open contracts and purchase orders on a monthly basis. The Director of Public Works has also sent clear direction to the Department, reiterating that vendors are explicitly forbidden from performing work for the City without an active purchase order or contract.

BSFMD staff will utilize contract tracking tools to guide notifications to vendors to cease work when expiration dates are approaching.

Finding #2: Fleet Management’s current process for identifying cars with safety recalls is ineffective – High Risk
The Department is committed to ensuring all vehicle operators are driving vehicles that meet Federal safety standards. As of November 2024, BSFMD staff has drafted and implemented an SOP setting up routine online checks for safety recalls for City vehicles. This involves analyzing recall alerts through the National Highway Traffic Safety Administration’s SaferCar portal monthly and setting up automatic, real-time alerts via push notifications and emails for recalls on City fleet vehicles. This analysis will feed into a report that will be reviewed weekly between the Fleet Superintendent and Supervisors. The SOP also outlines an escalation protocol and PAGE 72
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decision matrix that will be vetted and approved through the City’s Safety Office and Risk Management group for when vehicle operators do not comply with requests to bring in their vehicle for recall work. BSFMD has opened a purchase order that allows manufacturers to perform onsite recall service at the City Yards. All outstanding vehicle recall services are expected to be completed by March 2025.

Finding #3: User access to FASTER and EKOS should be limited based on need – High Risk BSFM
D staff has completed restructuring FASTER access to ensure the security of the information contained in the system. The roles have been limited based on how the system is used by staff members and includes a power-user role, a system administrator role, and a superintendent user role. Power-users will include two Management Analysts. The system- administrator role will be assigned to the supervising Management Analyst and a Senior IT Analyst from DoIT. The superintendent role will include the Fleet Superintendent. All other users will be generic users with limited access in defined roles based on utility. By the end of March 2025, these roles and permissions will be mirrored in the EKOS system and users assigned or reassigned appropriate roles based on their position needs. The restructuring of FASTER and EKOS will drastically reduce the number of system administrators with access to fleet management systems and increase the number of restricted, generic users.

Finding #4: Rates and factors used to bill other City departments are not accurate – High Risk The
Public Works Department will develop a calculation that will determine an appropriate markup for all types of fuel, labor, subcontractors, and parts. This new markup will be used to fund forecasted replacement and maintenance needs as well as indirect operational costs. With support from the Finance Department, BSFMD will develop an accounting process to accumulate funds from the portion of the markup intended for future infrastructure needs.

These funds will be specifically tracked and separated from other operational funds. The new markup will be reviewed by BSFMD on an annual basis during the budget development process, with expected implementation no later than June 2025. Additionally, the Fleet Superintendent has already implemented a new procedure for Parts Technicians that will ensure sales tax is being consistently applied on all part unit rates entered into the FASTER system.

Finding #5: Stronger controls needed over manually logged fuel and fuel fobs – High Risk As o
f November 2024, all billing to other departments for remaining gasoline transactions had been completed. To ensure fuel transactions are properly logged moving forward, BSFMD staff has drafted and implemented an SOP that provides step-by-step instructions on the manual fueling process and how to appropriately bill each fill-up. Staff has also reviewed the fleet inventory and confirmed that 505 of the 805 vehicles now have fuel cubes installed. A workplan has been implemented and work has begun to replace all remaining fuel rings with fuel cubes by June 2025. Staff has also drafted a fuel fob customer service agreement to be signed by all fuel fob users. An accompanying policy is currently being drafted that establishes strict criteria for who is allowed to hold a fuel fob, how to correctly use the fob, and requires the fob user’s PAGE 73
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department to reconcile and report all fuel usage on a monthly basis to BSFMD. The draft is being modeled on the City’s Procurement Card policy. Once the policy is completed, a memo will be sent from the Public Works Director to all Departments with information about the change to fuel usage, and customer service agreements will be sent to all vehicle operators.

Expected rollout of the policy and service agreement is June 2025.

Finding #6: Fleet Management does not utilize all of FASTER’s capabilities – High Risk BSFM
D has implemented a host of new policies and procedures to help staff more fully utilize the features of the FASTER system. The system has been expanded to cover three shops instead of two (General, Public Safety, and Sanitation). BSFMD is collaborating with DoIT staff to create a FASTER design and utilization plan, new performance measures, and expanded reporting capabilities. Annual training hours will now be assigned to all relevant BSFMD staff, and surveys will be distributed to identify competency and further training needs. Preventative maintenance schedules have been developed for all vehicles in the fleet with associated task lists added to each service. Preventative maintenance service information such as mileage is imported on an hourly basis from GPS devices in each vehicle. Utilizing an imported email distribution list in the FASTER system, preventative maintenance notifications will be sent to vehicle operators when a vehicle reaches the designated service interval. A monthly report on due maintenance will be reviewed by the Fleet Superintendent to determine which vehicles are delinquent on service. Non-compliance with preventative maintenance scheduling will now result in the deactivation of fuel cubes. All of the new policies and procedures related to utilizing the FASTER system are expected to be fully implemented by June 2025.

Finding #7: Fleet Management does not track or publish any performance measures – High Risk
The BSFMD Administrator, Management Analyst, and Fleet Superintendent will be collaborating with ASD staff throughout Fiscal Year 2025 to create specific operational and staff performance measures. Measures will be implemented to hold staff accountable to the responsibilities tied to each position, inclusive of administrative and operational staff. Target completion for these new performance measures is June 2025.

Finding #8: Monthly billings are late and provide no backup to departments – Medium Risk BSFM
D staff have developed and implemented an SOP that identifies the roles and responsibilities of staff involved in pulling billing data, calculating appropriating billing amounts, and routing bills to other departments. BSFMD staff will prepare billing by the 10 th of the month following the close of the previous month so charges can be posted by the Finance Department by the 15th. A monthly report with relevant backup documentation for all billed charges will be created and uploaded to a SharePoint site that will be accessible by appropriate staff in each department. The monthly report is expected to be implemented by March 2025.

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Finding #9: FASTER data contains inaccurate or incomplete information – Medium Risk BSFM
D staff will work with DoIT and the FASTER Technical Support Team to identify and/or develop quality control reports that can be used by the division for proper data management.

During this process, the FASTER Technical Support Team will be tasked with reviewing and scrubbing existing FASTER data to ensure that incorrect data is properly removed. BSFMD staff will conduct quarterly quality control analyses on the data in the FASTER system to ensure it remains accurate. As of November 2024, 95% of the vehicle warranty information has been reviewed and correctly logged in FASTER. Any remaining data not currently input into the system, such as missing VIN/asset numbers or incomplete maintenance schedules will be input by BSFMD staff by June 2025. The BSFMD Management Analyst will also refine the existing preventative maintenance program based on standards set by the American Public Works Association and industry leaders. An annual report will be created by BSFMD staff that will forecast anticipated preventative maintenance for all City vehicles, with progress reports submitted to the Public Works Director on a quarterly basis. The preventative maintenance program and associated reports is expected to be ready for implementation by June 2025.

Finding #10: Improve processes over managing parts inventory – Medium to Low Risk As o
f October 2024, the excessive adjustments while tracking parts inventory has been fully addressed. BSFMD Parts Technicians have always been the only positions that have access to manage and modify parts inventory. The BSFMD Power Users and System Administrators will be given access for backup system management but will not be assigned to manage or modify inventory. No inventory adjustment will be made until the Fleet Superintendent is onsite and has been provided a valid reason for the adjustment. The BSFMD Administrator will review an inventory audit report on a monthly basis to address all adjustments and any potential discrepancies. This inventory audit report will be implemented by March 2025.

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Department of Public Works - BSFMD Audit Response Matrix Attachment A for Appendix B Recommendations PW Response Completion Timeline

1.1) Set and enforce maximum number of days for coding and processing invoices in the AP Processor so that vendors are paid within 30 days.

BSFMD is developing an SOP for coding and processing invoices in the AP Invoice Processor. Standard response and turnaround time to not exceed 12 days for processing invoices, purchase orders, and contracts. •MA III's will provide weekly updates of aging items to section supervisors. •BSFMD Administration Supervisor will provide updates on invoicing progress during weekly managers' meeting. •BSFMD Administrator will include invoicing progress updates in biweekly meetings with Superintendents. •New vendor invoicing procedure has been implemented to require more detailed invoice information, streamlining the internal review process.

March 2025

1.2) Develop processes, related tools, and individuals responsible to track spend rates on open POs and contracts. Vendors with POs/Contracts that have expiring dates or funds should be notified to stop work before contract dates or amounts are exceeded.

ASD has provided BSFMD with a contract and purchase order tracking tool that gives details on each active contract and purchase order including contract/PO number, status, contract method, vendor name, description, initial expiration date, extended-through date, administrator name, original total, revised total, liquidated total, sum of percent spent, and remaining balance. This tool also variably highlights contracts and purchase orders that are due to expire within 90/60/30 days. •MA IV will review tool on a monthly basis and ensure notifications are sent out to vendors on contracts or purchase orders that are within 30 days of expiration.

Completed

1.3)
Include performance metrics related to BSFMD purchasing in the BSFMD Administrator's performance evaluation.

BSFMD Administrator will work with PW Director to establish proper performance metrics related to BSFMD purchasing. June 2025

1.4) Require BSFMD Administrator to work with PW ASD to ensure vendor contracts or POs are planned for the appropriate annual estimated need and issued prior to the start of the fiscal year.

The plan of action to improve the procurement process has been initiated with added support from ASD staff. ASD will continue to assist in overhauling BSFMD's procurement process through FY2025. •FY25 Fleet purchase orders have been reviewed to identify similarities in types of service. These purchase orders have been targeted for consolidation as separate formal project bids for five-year contract solicitation. •A Request for Information has been completed which has informed and validated the structure of the consolidated bid specifications. •Bid solicitation is anticipated for posting beginning December 2024. •Bid awards will be strategically staggered to spread out processing of new solicitations upon expiration. •ASD and BSFMD staff are currently meeting weekly to discuss procurement needs, potential improvements, and to implement changes.

June 2025
Finding #1: Fleet Management’s current procurement practices are not effective and do not comply with city policies (High Risk) 24-PW-001
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Department of Public Works - BSFMD Audit Response Matrix Attachment A for Appendix B

2.1) Develop a written procedure requiring staff to periodically check online for recalls related to all City vehicles. Procedure should include:
a) Maximum time before vehicle is required to be corrected, including escalation procedure if vehicle is not turned in timely by City staff for repairs; and
b) A decision matrix on whether the vehicle should be taken out of use if parts are not readily available to repair it depending on the severity of the issue and safety concerns for City Staff.

BSFMD has drafted and will continue to refine an SOP for monitoring vehicle safety recalls and performing service. •MA III will generate a monthly recall report and submit to the Fleet Superintendent and Safety Officer. MA III will include manufactuerer safety recalls from NHTSA online portal
•A review of all recall efforts will be included in the Superintendent and Supervisor weekly agenda meeting •A purchase order has already been aproved for vehicle manufacturers to perform on-site recall servicing •Vehicle operators with a recall open on their vehicle will be notified via email. BSFMD staff will work with the Safety Officer to determine the appropriate amount of days a vehicle operator has to bring in recalled vehicle for service before which the fuel cube will be shut off. •There are 79 open recalls for Ford cars and trucks and 55 open recalls for Chevrolet and GMC cars and trucks. These two vendors can come onsite and perform multiple recalls at one time. Appointments have been scheduled for November 23rd and November 30th to perform 40 open recalls for Chevrolet Bolts, and trucks. •Vehicles currently at a dealer for repairs will have any open recall performed while in their possession. •BSFMD staff are reviewing the remaining vehicles and equipment in FASTER and uƟlizing each manufactures web site to verify open recalls. Staff have started the process of ordering needed parts and scheduling the recall repairs. •Departments will be contacted to make these vehicles available. •If necessary, fuel rings will be disabled due to non-compliance. •In addiƟon to recalls mailed to the city, periodic recall verificaƟon will be made on each manufacturer website March 2025

2.2) Develop performance metrics related to number of vehicles with safety related recalls, type of recall, and number of days outstanding since recall was issued on vehicle. These metrics should be distributed to the ACM, the PW Director, the Safety Officer, and the Deupty City Manager.

BSFMD will develop performance metrics related to vehicle safety recalls. Data points related to the number/type of recall and the number of days outstanding since the recall was issued will be collected, monitored, and updated by a BSFMD MA III. Specific performance metrics include:
•Recall Completion Rate based on a percentage of recalled vehicles repaired •Total number of recall events
•Total number of units recalled
•Average number of recalled units per event
•Recall Rate
A summary report of this data will be distributed to the Assistant City Manager, the Public Works Director, the Safety Officer, and the Deputy City Manager on a quarterly basis.

March 2025
Finding #2: Ineffective Vehicle Safety Recall Process (High Risk) 24-PW-001
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Department of Public Works - BSFMD Audit Response Matrix Attachment A for Appendix B

3.1) Limit FASTER and EKOS system access to one individual from Fleet and one DoIT staff. Reassign other current users with system adminsitrator access to other, more appropriate roles base on their usage needs.

BSFMD staff have restructured FASTER access to ensure the security of the information contained in the system. As of October 2024, FASTER system security and permission access has been modified to include only two individuals in the System Administrator role - BSFMD MAIV & Senior IT Analyst from DoIT. Two additional roles were created "Analyst" and "Superintendent". Users were reassigned into the appropriate roles based on utility.

Completed

3.2) Both FASTER company access and generic user access to the FASTER system should be locked. FASTER accounts should be unlocked when they need access to the system. Generic accounts should be assigned to specific individuals if they are unlocked.

As of November 2024, FASTER company access has been locked, unless it is requistioned otherwise. BSFMD will investigate the feasibility and system constraints of individual accounts compared to generic accounts. Roles will then be assigned as appropriate to each position's needs.

March 2025

3.3) System administrator access to EKOS system should be assigned to either BSFMD's MA IV or appropriate DoIT staff.

As of November 2024, the MAIV has recieved System Administrator access to EKOS to audit the system, and reassign permissions to mirror FASTER where applicable.

Completed

4.2) Analyze the replacement cost of all fueling facilities and calculate an appropriate markup to fund forecasted replacement and maintenance needs. Funds accumulated from this additional markup should be set aside for future infrastructure needs and not used to fund current operations.

BSFMD and ASD Analysts will collaborate with the Finance Department to analyze the replacement cost of all fueling and infrastructure needs to calculate the appropriate markup to fund forecasted replacement and maintenance. A separate account string will be created for the portion of the markup revenue tagged for infrastructure improvements/replacement.

March 2025
Finding #3: Reduce System Administrator Access to Fleet Management Systems & Reduce Access for Generic Usernames (High Risk) Finding #4: Inaccurate Rates & Factors Resulting in Over/Underbilling Departments (High Risk) June 20254.1) Annually review all rates and factors billed by BSFMD to verify they reflect actual costs from prior year during the budget development process.

BSFMD staff is developing a workflow that will detail an annual process, during budget development, where BSFMD and ASD Analysts will review all rates and factors billed by BSFMD to verify they reflect actuals from the prior year – internal auditors will assist in providing BSFMD a template to address this annually. BSFMD will conduct a rate analysis to right-size all charges and markups for fuel, overhead, and labor, including creating a separate account for the portion of the markup revenue tagged for infrastructure improvements/replacement by FY25Q4 – this process includes charging taxes and fees on unleaded and diesel fuel. 24-PW-001
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Department of Public Works - BSFMD Audit Response Matrix Attachment A for Appendix B

4.3) Immediately change the process of charging gas and diesel to include all taxes paid on fuel purchased.

BSFMD staff is collaborating with the Finance Department to determine the best method to change the process of charging gas and diesel so that all taxes are paid on fuel purchased. Once a methodology has been established, BSFMD will notify all Departments and provide a breakdown of how each fuel type is charged.

June 2025

4.4) Immediately change the process of entering parts unit rates to include all taxes and delivery charges paid on parts.

BSFMD staff has implemented a process that ensures sales tax, delivery charges, special handling and freight charges will be added to each part. If these charges are not readily available, the work order will not be closed until the information becomes available and input into the system. Notification of this new process was sent to Parts staff in November 2024.

Completed

5.1) Provide a schedule for replacing all fuel rings on City vehicles with fuel cubes by end of FY2025.

BSFMD Staff has created a schedule to replace fuel rings on the City vehicles with fuel cubes by the end of FY2025, As of November 2024, 505 vehicles have fuel cubes. BSFMD anticipates replacing 100 fuel rings per month on City vehicles with fuel cubes. BSFMD is strategically coinciding fuel ring replacement with recalls to minimize vehicle downtime. BSFMD has also drafted an SOP in support of the targeted completion date. If a vehicle is not brought to Fleet for the replacement of the fuel ring, a mobilized Fleet Crew will be established and sent for mobile fuel ring replacements in the field.

June 2025

5.2) Develop policy that includes a customer service agreement for fuel fob usage, similar to PCard program. Policy should establish strict criteria for who is allowed a fuel fob. Policy should require the department requesting the fuel fob to monthly reconcile all fuel fob usage and notify BSFMD that usage complied with City Policies.

A customer service agreement has been drafted and will be reviewed by ASD. An associated policy contextualizing the service agreement will also be drafted and proposed for review and approval. Within the policy, articles will be written to establish fuel fob eligibility criteria and a reconciliation process similar to P-Card reallocations, which includes user and supervisor signature confirming fuel fob was used in compliance of the policy. Out of compliance usage will result in progressive reprimands. The fully approved and vetted policy and associated service agreement will be ready for implementation by FY 2026.

June 2025

5.3) Develop a written procedure for billing manually logged fuel usage that clearly documents the process for billing and requires a supervisory oversight and approval.

A written SOP has been drafted that provides step-by-step instructions for manually fueling a vehicle. BSFMD is also exploring the available solutions through EKOS, a purchased fueling solution, to identify areas of improvement at the time of manual dispensing. BSFMD has written a procedure for how manually logged fuel must be billed and how all billing is approved through the BSFMD Division.

Dec-24
Finding #5: Inaccurate Tracking of Manually Logged Fuel Usage and Strong Controls Needed Over Use of Fuel Fobs (High Risk) 24-PW-001
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Department of Public Works - BSFMD Audit Response Matrix Attachment A for Appendix B

6.1) Reconfigure FASTER from 2 to 3 shops BSFMD staff have reconfigured FASTER which now covers three shops (General, Public Safety, and Sanitation). Completed

6.2) Work with DoIT on a process design and system utilization plan for FASTER
The BSFMD MA IV has begun the partnership with DoIT staff to first conduct a system audit of FASTER to identify system misuage and potential improvement areas. This audit will drive a future process design and system utilization plan for FASTER.

June 2025

6.3) Add training hours annually to the software license renewal Beginning no later than March 2025, biweekly meetings between the Fleet system users and MAIII will be established to discuss or assist in resolving system issues, project needs, training or step by step guidelines/video training for internal reference. Annual training from FASTER technicians will also be incorporated into this plan. PM schedules were added to faster in December 2022. A custom script was submitted to Faster to import email addresses from the City's E-directory in May of 2023. August of 2023 we added task lists to each level of PM service in Faster, PMA, PMB, PMC, PMD, PME, and TC Trailer PM. These PM services were added, and missing PM services are currently being added to all remaining assets . PD and Fire use spreadsheets to track PM services because they do not use GPS. We are in the process of adding all their vehicles to GPS Insight, allowing milage and hours to be imported for each asset for future PM reminders and PM forecasting.

March 2025

6.4) Revise the vehicle classifications and related PM definitions in FASTER to appropriately define required PM for electric and fuel powered vehicles, non-powered equipment, and specialty equipment.

FASTER recently added a Vehicle Equivalent Unit (VEU) module. This module's accuracy is contingent upon having the correct classification assigned to each vehicle. Classification data for each vehicle will be processed correctly by Fleet staff during initial intake, and a BSFMD MA III will review all past vehicle classification data for accuracy, making adjustments in the system as needed.

June 2025

6.5) Update FASTER to include PM schedules for all vehicles as well as warranty information for recently purchase vehicles.

Quarterly, report performance measurements to PW Director on completion of required preventative maintenance for all City vehicles.

BSFMD staff has developed PM schedules for all vehicles that includes warranty information and will upload this information for each vehicle in the FASTER system. A report of this data will be generated from FASTER and analyzed by a BSFMD MAIII before final submission to the PW Director on a quarterly basis. This report will detail the number of vehicles with outstanding PM, the number of days a vehicle has until it is needed for PM service, and the number of vehicles overdue for PM.

June 2025
Finding #6: Underutilization of the FASTER System (High Risk) 24-PW-001
35 PAGE 80
Department of Public Works - BSFMD Audit Response Matrix Attachment A for Appendix B

6.6) Set target days outstanding for all required vehicle maintenance and track monthly completion of required
maintenance. Vehicles with outstanding maintenance should be reported to PW Director when over 60 days late. Draft policy requiring shut off of fuel cubes for any vehicles with oustanding maintenance of more than 60 days.

BSFMD MA IV is working with the Fleet Superintendent to determine the number of days a vehicle can be outstanding on receiving PM.

BSFMD staff is drafting a policy that will include this number and outline the process for monthly tracking of required PM. This policy will also provide detail on the penalties for vehicle operators when they are overdue for PM, including the shut off of fuel cubes.

March 2025

6.7) Provide fleet customers with read-only access to the maintenance portion of FASTER
FASTER access has been locked and fleet customers will not have access due to security concerns. Currently FASTER does not have the ability to limit viewers access. Staff is working with FASTER to modify system to allow restricted access by user.

June 2025

6.8) Explore switching to ipads at mechanics stations As of Novemeber 2024, the BSFMD MA IV has recieved a test tablet and is testing FASTER with the Superintendent for proof of concept. An MA III will assist in expanding the pilot program and implementation of the tablets in the sanitation shop to assess the benefits and viability for use throughout all the fleet shops. In the meantime, BSFMD staff is working on producing a report to provide customers maintenance status information. This will be completed by March 2025.

June 2025
7) Provide a schedule identifying critical fleet performance measures, track these measures in FASTER, and report these measures to the Public Works Director quarterly
Performance measures (KPI's) are currently being developed by BSFMD staff through the current reporting capabilities of FASTER. These performance measures will utilize best practices as outlined by the American Public Works Association. Additionally, the VEU module in FASTER will provide other metrics to inform future performance measures, once the existing data has been reconciled.

June 2025

8.1) Establish written procedures for computing IS charges, including:
a) Identifying roles and responsibilities for individual staff involved in data generation/calculation; and
b) Deadlines for completing the calculations so that they are charged to the departments no later than 45 days after month end.

BSFMD staff have developed an SOP that identifies the roles and responsibilities of staff involved in pulling billing data, calculating appropriating billing amounts, and routing bills to other departments. This SOP has a target turnaround time for billing not to exceed 15 days after the close of the previous billing month.
•A BSFMD MAIII will be trained to verify account strings and create a posting template to be reviewed by MAIV for posting by the 10th after the month ends.
•The BSFMD MAIV will review and resolve corrections/discrepancies within 3 days for final submission to Finance for posting.

March 2025

8.2) Require all PW Divisions that charge IS charges to provide details of those charges to the respective departments as soon as the charges are sent to Finance.

The BSFMD MA IV is currently working with DoIT staff to create a billing data backup report. BSFMD Administrative Specialists will run and post this report to a SharePoint site accessible by the relevant Departments so that staff can review all billing details.

March 2025
Finding #7: Lack of Performance Measures (High Risk)
Finding #8: Timeliness and Lack of Transparency for Internal Service Charges to City Departments (Medium Risk) 36 24-PW-001
PAGE 81
Department of Public Works - BSFMD Audit Response Matrix Attachment A for Appendix B

10.1) Reduce number of users that can adjust inventory to the 2 parts. staff and the 1 individual assisting parts staff BSFMD has implemented a new SOP on parts adjustments that requires a justification with pre-authorized approval from the Fleet Superintendent. Fleet Superintendent will run monthly inventory adjustment reports to review and discuss with Administrator at the first one-on-one meeting of each month. Inventory modifications in the system are now restricted to the the Parts Technician.

Completed

10.2) Require fleet superintendent to create an exception report for major inventory adjustments that is sent to BSFMD
Administrator with detailed reasons explaining any
discrepancies.

As of November 2024, the Fleet Superintendent will run an inventory exception report for major inventory adjustments (Inventory price Adjustment Report) in FASTER will be sent to the BSFMD Administrator with a detailed reason explaining discrepancies. An SOP in place and the number of users has been corrected. No inventory adjustment will be made until the fleet superintendent is onsite and has been provide a valid reason for the adjustment.

Completed

10.3) Require Fleet management to document policies and procedures related to best practices parts management.

BSFMD staff are developing an SOP that will document the proper policies and procedures for parts management to be followed by Parts Technicians and other relevant staff.

March 2025

10.4) Require Fleet Management to implement min/max
quantities in FASTER for all necessary parts
BSFMD staff will implement minimum and maximum quantities in FASTER for all necessary parts. March 2025 Finding #10: Excessive Adjustments Tracking Parts Inventory (Medium to Low Risk) 9) Create schedule identifying all data that needs to be cleaned up and who will be assigned to complete data cleanup, including interim and final due dates for cleanup process.

Pre-migration clean-up of data has been performed prior to FASTER system transitioning to the WEB-based version in FY23. MAIII will perform a system data audit to identify and correct inconsistencies and incomplete system vehicle profiles. Administrator will provide monthly progress report for system projects to the Director. Two temporary staff have been enlisted to fully focus on Fleet operations. The CSW Manager works closely with Fleet Superintendent and reports directly to the Administrator to assess existing processes at each shop to identify enhancement and standardization of procedures/workflow. CSW-Office Assistant provides supplemental support with Fleet back-log with data entry, system data updates, verification, recordkeeping, or clean-up. A draft SOP and workplan with interim deadlines has been drafted and data cleanup efforts are at 95% completion.

March 2025
Finding #9: Inaccurate and Incomplete Data in FASTER (Medium Risk) 24-PW-001
37 PAGE 82
Audit of Fleet Management Practices
Internal Audit Division
City Manager’s Office 38 24-PW-001
Appendix C: Summary of the COSO Internal Control Framework Components and Principles COSO
Component
Component Principles
Control Environment
 Commitment to integrity and ethical values
 Exercises oversight responsibility
 Establishes structure, authority, and responsibility
 Commitment to competence
 Accountability enforced
Risk Assessment
 Objectives are specified
 Risk is identified and analyzed
 Fraud risk assessment
 Identify and assess impact of significant changes on internal controls Control Activities
 Develop control activities that mitigate risk
 Develop general controls over technology
 Control activities deployed through policies and procedures Information and
Communication
 Uses relevant information
 Internal communication of internal control responsibilities  External communication of internal control performance Monitoring and
Review
 Conducts ongoing and/or separate reviews of internal control  Evaluate and communicate internal control deficiencies Source: Internal Control-Integrated Framework, © 2013, Committee of Sponsoring Organizations of the Treadway Commission (COSO). All rights reserved. Used with permission.

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