Response to the Audit
Los Angeles Homeless Services Authority
March 29, 2018
Elaine M. Howle, CPA
California State Auditor
621 Capitol Mall, Suite 1200
Sacramento, CA 95814
Subject: Response to State Auditor’s Report No. 2017-112 regarding Los Angeles Homeless Authority
Dear Ms. Howle:
Thank you for the opportunity to review the California State Auditor’s Report No. 2017-112. This report provides several recommendations that, once implemented, will enhance LAHSA's ability to track, report, and analyze funding decision data. LAHSA appreciates the professionalism and attention to detail your staff exhibited during the audit process and the final document reflects their effort.
General Comments
LAHSA appreciates the State Auditor’s assertion that LAHSA’s evaluation process mitigates preference in funding recommendations and that we consistently use a standardized process for evaluating competitive applications for funding projects.
As noted by the State Auditor, LAHSA’s HUD evaluation methodology for HUD renewal projects is sound. LAHSA’s CoC evaluation methodology, as approved by the CoC Board, ensures the Los Angeles CoC submits the strongest application to HUD. HUD does not award a majority of points based on underserved areas, but rather on applications which demonstrate alignment with HUD priorities as stated in each year’s NOFA. LAHSA does consider the need in service areas in its efforts to encourage the submission of new project applications from these areas, however cannot control which agencies will apply nor the areas new projects will serve. Strong applications, regardless of service area, must be submitted during the national HUD NOFA competition in order for the CoC as a whole to be awarded the maximum amount of funds available. LAHSA’s ability to continually secure additional CoC funds illustrates the soundness of the CoC’s reallocation policy. In NOFA 2014, LA CoC received a $10 million bonus and in NOFA 2017 LAHSA received $109,398,295 in funds, an increase of nearly $5 million from last year. This represented the largest HUD Award the LA CoC has ever received.
As the funding available to homeless services has grown, LAHSA continues to evaluate our procurement process and seeks to make improvements to this system to ensure fair and unbiased evaluations. As mentioned by the State Auditors, LAHSA has taken steps to address funding variations such as creating new funding opportunities, reserving funds for underserved service areas, and providing technical assistance to increase the qualified applicant pool.
The Request for Statement of Qualifications (RFSQ) process represents LAHSA’s commitment to streamlining the procurement process and expanding the eligible applicant base for new funding opportunities. LAHSA understood that many applications failed threshold review mainly due to incomplete applications such as
failure to submit required documents or provide clear responses to basic application questions. In an effort to combat this, LAHSA developed the RFSQ process. As acknowledged by the State Auditor, the RFSQ process allows LAHSA staff to provide feedback and assistance to applicants and speeds up the Request for Proposal (RFP) timeline. In November 2017, LAHSA surveyed RFSQ participants in order to identify common issues and barriers. LAHSA is incorporating the results of these surveys into a RFSQ webinar which will be published by July 2018.
LAHSA acknowledges that funding decisions based on service area were not comprehensively tracked; however, this information was tracked on the individual RFP level since many funders require funding decisions based on the most recent homeless count results per service area. Through this individual tracking, LAHSA is able to assess service area shortages by RFP and will attempt to secure providers in the underserved service areas. As LAHSA is committed to ensure fair allocation of funding across service areas, LAHSA appreciates that comprehensive, aggregate data tracking would enhance our funding policies and decisions.
LAHSA agrees with the State Auditors assessment regarding the organization’s application data. Starting with the influx of funding during fiscal year 2016-2017, LAHSA understood that our data storage system was not sufficient to meet the demand. As mentioned by the State Auditor, LAHSA procured Contract Logix in 2016. In addition, LAHSA began implementation of SharePoint to replace the network hard-drive with a cloud-based system. Once implemented, SharePoint will increase efficiency and transparency while eliminating information silos and duplicative work. An internal workgroup was created to ensure that SharePoint’s structure and implementation matches staff needs and workflow processes. SharePoint’s implementation timeline is on target and should be live June 2018. Furthermore, with the assistance of ABT Associates, a HUD Technical Assistance consulting firm, LAHSA has started planning the development of a grant management system. Through Contract Logix implementation, the SharePoint implementation, and the grant management system, LAHSA is enhancing our data standards, governance, and management.
Recommendations
To ensure the consistency and transparency of its processes, the Authority should:
Recommendation: Implement updated written policies and procedures by July 2018.
Concur. LAHSA recognized that necessary improvements to our policies and procedures were not formalized and hired a consultant in 2016 to assist in revising and formalizing policies and procedures. In December 2017, LAHSA revised and adopted the Request for Proposals (RFP) and Request for Information (RFI) policies. In February 2018, the RFSQ policies were adopted. In addition, LAHSA is revising the Procurement Policy and will create an instructional procedures guide for staff.
Recommendation: Update its written policies and procedures regularly to reflect changes in its processes.
Concur. LAHSA agrees regularly updating policies and procedures is essential. In 2017, LAHSA began separating Board-approved policies from procedures. Prior to this, we recognized that intertwining Board-approved policies with procedures created additional barriers to change processes. LAHSA will work with our Policies and Procedures consultant to develop mechanisms ensuring procedures are reviewed and updated on a regular basis.
To ensure that its funding recommendations are effective, consistent, and transparent, by July 2018 the Authority should:
Recommendation: Develop and implement processes to ensure that staff complete evaluation tools as intended.
Concur. The revised RFSQ process, adopted February 2018, includes additional supervisor oversight, to ensure staff are consistently completing evaluation tools. LAHSA is currently creating a handbook to accompany these formalized policies and procedures. LAHSA has been working to incorporate clear and detailed instructions for completion of its RFP evaluation tools to ensure consistent data completeness and integrity on the part of all evaluators. In addition, LAHSA will continue to review processes to ensure data accuracy. As LAHSA creates system automation, we will create additional data accuracy mechanisms.
Recommendation: Develop and implement a process to document supervisory review of its application evaluation process and meetings in which it makes funding discussions.
Concur. As stated above, LAHSA has revised the RFSQ process which enhances the supervisory review process. As LAHSA revises our procurement policies and procedures, LAHSA will ensure appropriate documentation standards, such as meeting minutes which are reviewed and approved by department directors, are incorporated.
Recommendation: Formalize these changes in its written policies and procedures.
Concur. LAHSA acknowledges that in the past, changes to policies and procedures were not formalized. As previously stated, in December 2017, LAHSA revised and adopted Request for Proposals (RFP) and Request for Information (RFI) policies. In February 2018, the Request for Funding Statement of Qualifications (RFSQ) policies were adopted. In addition, LAHSA is in the process of revising the Procurement Policy and will create an instructional procedures guide for staff.
To expand the number of service providers through targeted technical assistance effectively, the Authority should:
Recommendation: Evaluate the use of a document management system to document the application evaluation process and implement the appropriate system by December 2018.
Concur. With the assistance of ABT Associates, LAHSA created a workgroup to develop a grant management system. This workgroup will review the capacity of existing systems, such as Contract Logix, to inform this recommendation. LAHSA will ensure the application evaluation tracking and reporting is incorporated into LAHSA data management systems.
Recommendation: Evaluate the effectiveness of the selected system within 12 months after implementation.
Concur. LAHSA agrees with this recommendation and will evaluate our data systems within a year of implementation.
Recommendation: Develop and implement a process to track aggregate application evaluation data, including the common reasons for failing, among other information by December 2018.
Concur. While LAHSA currently collects evaluation data on an individual level, LAHSA agrees that readily accessible aggregate data would provide additional information which may increase capacity building and technical assistance to service providers. LAHSA is committed to increasing the application pool for homeless funds and believes this recommendation is essential. LAHSA will ensure this recommendation is incorporated into the data systems currently under development.
Recommendation: Track service areas in its database management system or other mechanism to identify accurately the results of its application evaluation process, amounts awarded, amounts funded and amounts disbursed by service area by July 2018.
Concur. LAHSA acknowledges that tracking mechanisms in place during the State Audit were not robust enough to meet the current need and reporting expectations. Through the implementation of Contract Logix, a document management system, LAHSA has collected and imported these data elements for active contracts into the Contract Logix system.
Recommendation: Track HUD awards, include renewals projects, by service area by July 2018.
Concur. LAHSA agrees with the recommendation. As previously mentioned, Contract Logix will hold these data elements. All active contracts were imported into Contract Logix by March 21, 2018. These records are currently being reviewed for accuracy and will be fully migrated by mid-April 2018.
Recommendation: Track the reasons that providers that attend the mandatory bidders’ conference do not apply for funding and address any barriers by July 2018.
Concur. LAHSA agrees with the recommendation and will create a mechanism to survey or poll applicants that do not apply for funding to identify and address these barriers through our procurement process or technical assistance process.
Recommendation: Continue its efforts to develop and implement technical assistance programs for service providers, and track and analyze the results of that assistance by April 2019.
Concur. LAHSA agrees and will continue to implement technical assistance programs to service providers. In preparation for the 2018 re-release of LAHSA’s RFSQ solicitation, staff is currently performing an analysis of all aspects of the application and evaluation process to ensure that documentation requirements are clearly stated and easy to understand through the provision of examples. Various responses to our RFSQ survey indicated the need for such clarifications. Additionally, the webinar in development will underscore the importance of consistency and continuity between agency documentation and agency narrative responses provided by RFSQ applicants. LAHSA will track these programs in our data systems to allow for robust performance based analysis.
Conclusion
We appreciate the opportunity to address the recommendations in the final State Audit report. Thank you again for your effort and assistance in helping Los Angeles Homeless Services Authority improve upon its existing practices. As noted in our response, LAHSA has begun improving processes and implementing data system. We look forward to incorporating the State Auditor's recommendations into our current improvements, allowing LAHSA the ability to enhance and analyze LAHSA's sound funding evaluations processes.
If you or your staff have any questions or require additional information, please contact Darcie Mulholland, Monitoring and Compliance Associate Director at (213) 225-8449 or by email at dmulholland@lahsa.org.
Sincerely,
Peter Lynn
Executive Director