Highway 61 North Shore of Lake Superior FHWA

Highway 61 North Shore of Lake Superior FHWA Minnesota Division PAY QUANTITY DOCUMENTATION REVIEWS For SALT December 9, 2020 ABBI GINSBERG &SUE THOMPSON FHWA

Contents • Background • Recent Reviews of Pay Quantity Documentation 2

Why This 1. Topic? Requested for Spring 2020 Inspectors’ Workshop 2. FHWA Memo reemphasizes “getting payments right!” 3. Mn. DIV commitment to HQ to present this to Mn. DOT after 2019 Improper Payment findings. 3

Pay Quantity Documentation: Mandatory Reviews • Compliance Assessment Program (CAP) • Improper Payments Elimination and Recovery Improvement (IPERIA) • Office of the Chief Financial Officer (HCF) 4

Proper Payments (1) made for the correct amount, net of any necessary credits or adjustments, and (2) in accordance with Federal laws, regulations, and contract or agreement, and (3) to the correct recipient, and (4) for eligible and authorized work, activities, or goods and services received, and (5) properly documented. To be properly documented, records supporting a payment must be in sufficient detail to permit a reviewer to trace the funds to a level of expenditure adequate to verify the accuracy of the payment and establish that the funds were used solely for authorized purposes. 5

Reviews of Pay Quantity Documentation • Improper payments continue to be a national risk. • Improper payment review is a “critical activity”. • These reviews tend to focus on pay item quantity documentation: • Compliance Assessment Program Reviews • IPERIA and HCF Reviews 6

CAP REVIEWS • Division Office Field Operations Team is the lead • Typically MN has about 55 projects, half TH and half SALT • Headquarters statistically samples projects authorized for construction 1 -2 years ago, and develops questions: Contract administration Financial documentation compliance Field documentation Environmental 7

Sample CAP Question • Based on a minimum review of one applicable contract pay item paid in one progress payment, did the State provide adequate assurance that completed work quantities were determined accurately, in accordance with the State’s statewide uniform procedures? (2018 and 2021 CAP Reviews) • 2018 - TH project docs were all compliant! - 7 SALT project docs were not compliant. 8

What is a Progress Payment? 9

2018 CAP - Poor Example • Voucher had pay items for two sizes of pipe, and there were 2 dates in the Item Record Account. • No other information was provided after several requests • “Pay quantity not supported” 10

2018 CAP - Good Example • Riprap quantity based on tickets • Memo explaining unused stockpile and weigh scale issue • Easy to connect dots to quantity paid • “the State provided adequate assurance…” 11

2018 CAP - Good Example 12

SALT Resources for Proper Documentation Mn. DOT 2020 Contract Administration Manual Chapter 3 http: //www. dot. state. mn. us/const/tools/conadminmanual. html Districts 1, 2, 3, 4 Ross Hendrickson, State Aid Construction Specialist 218 -766 -3745 Districts 6, 7, 8 Rollin Larson, State Aid Construction Specialist 507 -205 -6403 Metro Mike Pretel, State Aid Construction Engineer 651 -234 -7778 Kyle Puent, State Aid Specialist 651 -234 -7762 13

IPERIA “Improper Payment” Review • Division Office Finance Team is the lead • FHWA Headquarters statistically selects the MN project billings and pay items to be reviewed • If nationwide extrapolated results exceed statutory maximum, FHWA Headquarters must develop a nationwide corrective action plan • References: o Statutory Reporting Requirement o Improper Payments Information Act of 2002 14

Above: Details of a Weekly Current Bill Right: Notice of Random Transaction Selection (DCF) 15

Increases Improper Payment Risk • Multiple Funding Sources (partners, federal participation, etc) • % completion – progress payments (no prepayments) • Lack of support documentation (acceptance, calculation, location, etc) • Supplemental agreements (work prior to approval) 16

Nationwide IPERIA Results 17

HCF Review • Part of the FY 2018 corrective action plan: o Nationwide threshold - approx. $100 million o Nationwide extrapolated results – approx. $997 million • Headquarters identified risks from previous IPERIA reviews (next slide) • 2019 and 2020 – Additional reviews have been required to evaluate targeted risk areas, system control weaknesses and identify improvements 18

Nationwide HCF Results 19

MN Results 20182020 Field-related improper YEAR # of IPERIA Projects Reviewed # of HCF Projects Reviewed 2018 2 4 No improper payments 2019 2 5 3 projects with improper payments 2020 2 1 2 projects with improper payments Results payments: 2019: saw cuts paid for that were by spec incidental to another pay item. 2020: Incorrect quantity entered into voucher compared to support 2020: Paid for non-Fed-par items 2020: Selected voucher has a correction of a different pay item Other noted examples of incomplete documentation: - Missing date - Missing location of work 20

Questions 21

Contacts Abbi Ginsberg Transportation Engineer / ROW Specialist FHWA Minnesota Division 651 -291 -6104 abbi. ginsbert@dot. gov Sue Thompson Financial Specialist FHWA Minnesota Division 651 -291 -6106 sue. thompson@dot. gov 22