Kentucky Transportation Cabinet - AASHTO

Emergency Preparedness Engagement
AASHTO Internal/External Audit Subcommittee
Conference-July 2012
Alice S. Wilson – Executive Director, Office of Audits
In January 2009, an Ice Storm blanketed
Many roads were covered not only in snow and
ice, but also trees, and lots of them
 First priority was people
 Second priority was clearing roads
 No electricity, satellite phones in district offices
not working, emergency generators were needed
 On February 5, 2009, FEMA declared a “Severe
Winter Storm and Flooding” disaster for certain
areas of Kentucky affected by the storm
 KYTC entered into land leases for the first time
to handle the 15 million plus cubic yards of
vegetative debris
KYTC crews worked diligently to respond as
quickly as possible
 There was a LOT of vegetative debris to handle
 When acting quickly, some things fall through
the cracks so to speak
 Contractor issues crept up
 OIG conducted an investigation as a result of
complaints raised by contractor
 As of August 2011, KYTC spend $146 million as a
result of this disaster and received $45 million in
reimbursements from FEMA and FHWA.
The KYTC Division of Incident Management
issued an “After Action Review” which included
the following problems:
No communications available between county,
district and central office when satellite, cell and twoway radios didn’t work
All locations did not have generators
No fuel for equipment and personnel due to
electricity outage
Additional training for employees needed
FEMA provided inconsistent guidance
On January 21, 2011, KYTC OIG issued their
investigative report which included:
Deficiencies in debris management and site selection
 Contract term violations
 Deficient contract oversight
OIG report included recommendations that
KYTC should:
Develop a debris management plan
Make contract overseers aware of their
responsibilities, including vendor surveys
Identify training needs for district personnel,
including ethics
The investigation substantiated flagrant
deficiencies of contractor conduct by Contractor
and through its Subcontractor and included:
Billing KYTC for more hours than equipment
actually operated
Double billing
Forged operator signatures on equipment logs
The investigation revealed contract oversight in
district was not conducted or was insufficient.
 The Contractor and Sub committed fraud with
improper billing, falsification of equipment logs
and improper use of equipment.
Contractor flagrantly billed KYTC for inflated operational
hours of heavy equipment at Debris Management Site
(DMS), particularly in one county. District officials were
aware of the practice.
District officials were aware of and ignored the flagrant
and common practice of contractor equipment operators
improperly forging signatures on TC 71-214 Daily Report
on Use of Rented Equipment. District officials failed to
diligently review and sign TC-214 Daily Report on Use of
Rented Equipment, which is used as the basis for vendor
invoicing to KYTC.
An estimated 2,500 vendor submitted forms were reviewed
by OIG investigators and 173 were missing the CDE or
authorizing agent signature. A mere cursory review of all
the forms as they were submitted for payment would have
alerted the reviewer that the same person had obviously
signed for multiple operators.
Inadequate or no monitoring at some DMS sites. Issues with
improper rental equipment use would have been detected with
diligent monitoring efforts.
District senior officials were unfamiliar with specifications
and other terms of applicable contracts used in debris
KYTC relied on equipment rental master agreements to
manage debris at DMS. Work performed by a vendor under
this type of contract is typically for general maintenance of
roadway areas and the vendor is paid on an hourly rate for
equipment and operator. This type of contract (time and
materials contract) is well suited for short term work and
would be practical for use to facilitate movement of debris
during the response phase of the ice storm disaster, but not for
long term debris management. KYTC should have avoided
this type of contract and solicited for a contract specifically for
managing debris at DMS. FEMA deems time and material
contracts to be the least preferred type of contract for debris
OIG sent their Report of Investigation to the
Commonwealth’s Attorney for review and
determination of action.
On March 8, 2010 meetings were held at the
Commonwealth’s Attorney’s office
Settlements, totaling $234,384.20 in payment
reduction and repayment were tentatively reached in
which Contractor agreed to reduce pending payment
due from KYTC by $194,384.20, and Subcontractor
agreed to remit $40,000 to KYTC.
More could have probably been recouped had not
KYTC employees been involved in some of the wrong
KYTC Secretary was concerned with results of
emergency response as well as OIG report, so
asked me if Internal Audit could perform a
review to see what improvements had been made
since the January 2009 Ice Storm and what else
was needed for improvement
 On April 14, 2011 we had an entrance conference
with several KYTC staff and started the
 Purpose of the engagement was to look at events
during the 2009 Ice Storm, what procedures we
currently have in place and what procedures we
should add to our current emergency
preparedness policies.
We developed an audit program which included:
Review of applicable federal and state regulations
Interviews from various personnel in Purchases,
Maintenance, Accounts, Legal Services, Budget,
Human Resources, OIG and District personnel
Review of KYTC’s draft policies and procedures
Survey completed using “survey monkey” (sent to 171
KYTC employees and had 74 responses!)
Review of FEMA, various state DOT emergency plans
and the Kentucky Emergency Operations Plan
Review of private land lease agreements
Review of expenditures, reimbursements, and debris
quantities in relation to the 2009 Ice Storm
KYTC seeks federal reimbursement from FEMA,
FHWA Emergency Relief and USDA-NRCS
(Natural Resources Conservation Service)
 Different Federal agencies have different rules
and thresholds to meet, as well as documentation
 KYTC polices were deficient and not detailed
 KYTC management in different divisions had
differing views on what was required, who was
responsible for what, etc.
 Other states have plans in place, but they all
One of biggest issues: Land Leases
15 million cubic yards of debris
No DMS selected ahead of time
KYTC did not have authority to enter land leases, only our
Finance and Administration Cabinet (FAC) has authority
to do this
KYTC Legal Services approved a “land lease agreement”
after FAC granted approval to KYTC to enter into land
leases – however no instructions provided regarding how
DMS selected, by who, etc
KYTC paid $500 per acre per month for usage of land
Total expenditures for land leases: $2.7 million.
District in question spent .37 per cubic yard for land leases,
next district over only spent .09 per cubic yard and had
twice the debris
From survey we learned that:
57% did not feel there should be an additional contact for an emergency
73% reported there were no pre-approved Debris Management Sites (DMS)
in their county.
53% reported state owned property was not considered for a DMS site.
10% reported the use of emergency purchase procurement procedures prior
to or in place of existing contracts.
99% reported they understood the importance of proper documentation.
18% reported chipping/mulching debris was better than burning, or the
only experience they had.
41% acknowledged positive steps have been taken to correct past problems
or barriers.
96% reported documentation procedures in various ways such as digital
cameras, load tickets, timesheets, and the Operations Management System
Various responses were given on procedures to follow in an emergency with
19% reporting they would call someone else, do what they were told, or it
would depend on the emergency.
70% reported areas where the Cabinet is not ready or prepared for in
another emergency such as staffing, equipment, communication,
earthquakes, and pre-approved debris management sites.
After the 2009 Ice Storm, KYTC made the
following improvements:
Requested and received delegated authority from the
Finance and Administration Cabinet to let
emergency contracts for roadway clearance, debris
removal and disposal, site reclamation and
monitoring services.
 Procured state and district wide contracts for
equipment rental with and without operators.
 Procured Disaster Emergency Debris Monitoring
Service contract with VENDOR that provides
personnel to monitor and properly document the
debris removal and disposal activities across the
state during a disaster.
Recommendations included:
Maintenance should develop Emergency Preparedness
Plan (In Process)
 Maintenance should ensure training is provided on FHWA,
FEMA and NRCS policies, programs, regulations,
guidelines and documentation requirements (we
established “District Disaster Coordinators” and had them,
along with a backup attend FEMA/FHWA week long
training, reminders given at Section Engineers meeting
 Each district should have an emergency team that includes
a district disaster coordinator, a backup and someone from
the financial area (District Disaster Coordinators)
 Districts should identify debris staging, reduction, and
disposal sites in each county to expedite debris removal
and subsequent volume reductions and disposal actions
(considering ownership, size, location and
environmental/historic concerns) (In Process)
Recommendations (cont.)
Maintenance and Districts should maintain contact list of
central office, district, local agencies and non-profits with
the roles and responsibilities of each contact. (In Process)
Several divisions should develop a communication plan to
ensure that communication lines remain open
Several divisions should develop a plan to ensure fuel is
available for equipment in disaster areas (Done)
Maintenance should develop a process to track cabinet
force account equipment use and time and include
appropriate document retention requirements
KYTC should ensure Plan is communicated to all
appropriate personnel (will when Plan finalized)
Applicable KYTC manuals should be updated
Internal Audit shared several examples of
emergency preparedness plans and debris
management plans with applicable KYTC
 KYTC has a central office employee that is the
“Master of Disaster” who we hope stays, but
should be cross training another employee
The old saying is true…. “An ounce of prevention
is worth a pound of cure.”
 Since 1957, Kentucky has had a total of 65 major
disasters declared
 Since the 2009 Ice Storm, we have had 6 plus
major disasters
 Must be prepared for anything that comes our
way – Snow, Ice, Tornado, Flooding, Winds, etc.
Alice S. Wilson, CPA
Executive Director
Kentucky Transportation Cabinet
Office of Audits
200 Mero Street
Frankfort, KY 40622
502-564-6760 ext.3615
[email protected]

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