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Reston Association Board to Vote on Expanding Stricter Financial Controls Following Tetra Purchase

by Fatimah Waseem March 19, 2018 at 12:30 pm 42 Comments

After months of discussion, Reston Association’s Board of Directors will consider a move Thursday to strengthen its procurement controls and policies in response to a third-party review of RA’s controversial $2.65 million purchase of the Tetra property.

The rewrite of RA’s purchasing and procurement policies — which were last updated nearly six years ago — was recommended by StoneTurn Group, the forensic accounting firm contracted by RA to review the controversial purchase and cost overruns linked to the buildin’s renovation. A recent presentation by two RA members also flagged multiple concerns. 

“As a result of the Tetra Property Purchase Review by the StoneTurn Group several recommendations were made that the Association should strengthen, and the better document the Association’s policies and practices related to procurement and purchasing,” wrote board president Sherri Hebert in the draft proposal. Hebert was not available for comment.

The move expands RA’s current policies by building in more internal controls, stricter financial checks to avoid sole source contracting and seek competitive bidding, and improved documentation. Major purchases above $25,000 require board approval, among other levels of scrutiny.

If approved, the policies would address four broad areas: procurement rules, competitive procurement and purchasing, re-competing for services and rules governing sole service providers.

Purchases between $2,500 and $4,999 will require documentation justifying the need for purchases, two written quotes from competitive sources, an agreement reviewed by legal counsel and a purchase order signed by the department director, CFO and CEO. Currently, two verbal bids, a purchase order and a signature by any one of the above parties was required.

In addition to requirements for purchases between $2,500 and $4,999, purchases between $5,000 and $24,999 require three written quotes from competitive sources. Currently, policies require two quotations “to the extent practicable.”

The proposal also requires the approval of two-thirds of RA’s Board officers and fiscal committee chair for major purchases of $25,000 and above. Additionally, purchases above $50,000 require a request for proposals, at least three written bids, and a closed session board meeting regarding bidding process information. Approval of the final contract’s scope and pricing would occur in an open board meeting.

Currently, policies for a $5,000 contract and a $50,000 contract are generally the same.

If a sole source contract is the only option, RA must justify why one known source exists and that only one supplier can meet requirements. Individuals not authorized by the updated resolution to commit RA funds may be held personally liable for damages sustained by RA, among other consequences.

The changes also include industry-wide procedures for requests for proposals, requiring documentation like a description of technical requirements and a list of references of clients from the vendor. Service agreements will also include a conflict of interest statement affirming no conflict of interests are at play.

For those unable to attend, the meeting will be livestreamed on Reston Association’s YouTube channel at 6:30 p.m.

File photo 

  • 30yearsinreston

    Board approval ?
    That should stop the shenanigans

    What is the ‘Senior Director’ of Projects doing ?
    Too Busy ‘liasing’ to do his job ?

    • J Gallagher

      I know on Fiscal there was healthy discussion on the limits on these expenditures – and discussions of who should see what – so for smaller, everyday Purchases the CFO and staff would do the checks and balances – for larger purchases the Board would be involved. Previously, once an item was approved in the budget, it never made its way back to the Board, nor did any change orders related to the item, regardless of the size of the overrun – so we had a $279K approved budget for internal renovations on tetra, no contract and a nearly $300K overrun which the Board didn’t see until the work was 80% complete. Now the Board will see those larger items and any changes as they occur and not after when their hand is for Ed and they have no other choice than to pay the contractor.

  • HHNHH

    Seems like the Hook Road conversion from family recreational area to parking lot may be delayed. Maybe RA can assemble a volunteer force to take down the tennis wall in the mean time.

  • Donald

    I see the two StoneTurn recommendations for Procurement and Payment Controls were:

    Recommendation 11: Revise the resolution to remove the language stating the policy is only required to “the extent practical”. In the event that written quotations are deemed not to be necessary require that a memorandum be prepared and approved detailing the reasons and authorizations for the decision.

    Recommendation 12: Develop a process to ensure that prior to an invoice being paid they are matched and agreed to properly approved contracts or purchase orders. This should include an analysis of the aggregate amount paid under any to ensure that the invoice is within the approved terms.

    Ms. Hebert’s proposal suggests:

    Purchases between $2,500 and $4,999 will require:

    1. Documentation justifying the need for purchases,
    2. Two written quotes from competitive sources,
    3. An agreement reviewed by legal counsel, and
    4. A purchase order signed by the department director, CFO and CEO.

    Yea. That’s not adding any more bureaucracy to this little outfit called RA
    — he said facetiously.

    Donald

    • J Gallagher

      This requires staff to seek out comparative pricing for goods and services purchased with RA funds.

      And this ensures that the staff does not sign contracts, committing RA to something without someone taking a look at the contract RA is signing.

      And this establishes internal controls to ensure the CFO knows what the staff is purchasing.

      This policy protects member money from misuse. Let’s take the appraisal of the Lake House for an example. Staff would have had to get two bids instead of our attorney picking the appraiser. Staff would have had to inform the CFO why the purchase was needed (bringing him back in the loop that he was left out of) and our general counsel would have had to review the contract and engagement letter perhaps catching the fact that the instructions would have yielded the highest price for members. If this policy was in place, there would have been more checks and balances on that critical step in the tetra purchase.

      This Board is doing a good job tackling these tough issues – let’s see if it passes.

      • guest

        I can completely understand why these conditions are being put in place. But, from a programs and facilities stand point how is this good to do all of this for $2,500? I’m unsure how much pool supplies cost, but I do know from a home pool situation it may cost that just in a part or supply that’s needed ASAP to keep the pool up and running. I can’t see waiting a month for the Board to approve a part or supply that may be needed right away. Will the pool be closed until after all these steps are taken for $2,500?

        I know the summer camp program cost a great deal of money. Will they have to do this to pay for the trips the kids go on, the shirts needed for the program(last year they ran out and ordered right away, you need shirts to attend the camp). My children love the camps and I’m worried that some of the things that make the camps great may become compromised. We pay for our children to attend these camps, so why do they have to go through all these steps mid camp if they are using parent funds? The camp is over 30years old. Why would they need to justify camp? Can they use the same vendors they’ve used for 30yrs. As a parent I pay for my children to attend, not RA. I’m now going to rethink them attending this summer out of fears it will not be the same. I think some parents may also follow suit.

        I’m not against this new policy. I just think starting at $2,500 is a little low when it comes to pools, facilities, and camp. Because there could be things that arise(like a broken or vandalized pool) in that moment that need to be done ASAP and the policy in place can take a while

        • Donald

          I must agree. The next thing we will see is the reintroduction of carbon copy forms. “let’s get that in triplicate, ok…”

          This (and future) boards need to stop managing the staff. The senior leadership team is responsible for the ongoing business processes of the organization. There is only one board member responsible for interacting with the staff — the president — who only interacts with the CEO (Mr. Wood).

          This board has a tremendous amount to learn about governance best practices — something they better fix soon.

          Donald

          • J Gallagher

            You would have a leg to stand on if there weren’t previous shenanigans, but because there were, RA members have stepped up to help develop and approve internal controls to serve as a check and balance to the President-CEO power base. I can only speak for myself but can tell you that the RA staff and members who serve on the Fiscal committee, including Mr. Ganesan have all put in a tremendous amount of time writing and reviewing policies and procedures. You talk here like you know what’s going on but I am there and see the work being done.

          • Donald

            Ms. Gallagher, I see you are proud of being able to write policies and procedures. But, RA only has around 100 full time staff. Your starting to write the equivalent of the Federal Acquisition Regulations.

            As I said before, you need to be aware of the law of diminishing returns. You need to be aware rules and regulations dont change behavior. In fact, too many rules can stifle innovation and creative ways to increase efficiencies.

            I truly believe you and (yes, I need to say it) your associates – Ganesan, Carr, Hebert, Petrine, Bowman, Flashman, Johnson, Maynard, etc. et al, are still stuck in this perceived crisis mode.

            Here’s the thing, the crisis is over, and the board still doesn’t have a clear sense of its own role vs. that of the staff. This is making it VERY hard for the board to stop its micromanagement role. The danger here is that the memory of this crisis is becoming institutionalized. Further, this danger will linger long beyond the memories of just the current board members. These residual behaviors are now being transferred and taught to your preferred board member candidates. If elected, your new board will continue to act as if there is a crisis long after the crisis is over, micromanaging from some cellular level that is handed down over time until no one knows where it came from – it is simply the board’s culture – the way things are done.

            That is an awful place for an organization with just 100 staff.

            Donald

          • J Gallagher

            The Ritz isn’t managing public funds.

            We are not creating FARs – we are standardizing the way RA does business.

            Most of the policies have been in place for a while and we have not heard that they have disrupted RA business or created massive work overloads.

            No need to panic!

          • Donald

            Great answer from someone who apparently has never worked “the front of the house”.

            Customer service is relevant whether it’s a publicly traded company, a private partnership, a municipality, or a nonprofit. They all manage their funds on behalf of their stakeholders.

            Good to know you and your team have the member interests in hand.

            One suggestion. Step out of your team’s echo chamber and take a deep breath. Talk to the other 85% who rarely, if ever, vote. Next time you’re at the Safeway, ask someone you DON’T know what their thoughts are. Then rinse, and repeat. Might be revealing.

            Donald

          • J Gallagher

            I see you have resorted to your personal insults again. Sigh.

            How about stick with the issue.

          • Donald

            No insults intended. Just stating what I see. You’re a good person with good intentions. You just don’t want to listen to opposing views. That’s not an insult.

            Donald

          • J Gallagher

            I have no problem with opposing views – we successfully work through opposing views on the Fiscal Committee each month. What I have a problem with is inaccurate statements that misinform our members. I am tired of letting inaccurate and misleading statements go.

            And once again I am correcting your false statement here that I am part of the “kitchen cabinet” – I am not.

            And not sure what you meant about “front of the house” – as a stay at home mom for many years, I’ve pretty much worked every aspect of “the house” – LOL

          • Donald

            Ok, we’ll call it merely a coincidence, your associatin with all those folks.

            Donald

          • J Gallagher

            The policies were developed in the light of day and discussed at numerous (open-to-the-public) Fiscal Committee meetings.

            Additionally, the CEO and CFO were part of the discussions – everything that they requested was included. There were collegial discussions of the policies with people providing input and another set of eyes on existing policies. The staff sought the input of the community and there were collegial questions and discussions about the policies. We listened to some of the issues, we provided input, some of that input was included – but the entire process was collegial and cooperative and completed in conjunction with the CFO – the staff person responsible for implementing these policies. contrary to your assumptions, the process was cooperative and collegial.

          • Donald

            Good to know Jill.

            Nothing like getting the board to be involved in purchasing decisions. How many times a month does a director meet now? Three, four times a month?

            Now, a select few directors have to meet to decide on larger purchases. How many times will they have to meet? What about the staff, the CFO, and the CEO.

            How many times are you asking these directors and staff to meet per month on top of their existing commitments?

            Will they be open meetings to public comment?

            What if it’s summer, it’s a Saturday, and a pool pump and piping goes down and needs replacing? This is time sensitive.

            How will you get all the bids from multiple vendors, the board directors, the CFO, the CEO together to make an immediate decision.

            You going to keep the pool closed until the board meets the following month? If they can meet that Saturday, what about public board meeting announcements?

            These decisions are staff matters. Unfortunately, you have lost all faith in them. You are still persecuting everyone under the pretense of “reform”.

            The good news. Future boards, who know what they are doing, can change these rules or get rid of them.

            Donald

          • J Gallagher

            When decisions were left only to staff, things did not go so well. There was a need for controls which stoneturn noted – we are instituting controls and you’re still not happy.

            I give up.

          • Donald

            So staff will be enemy one until your team decides otherwise. Geez.

            This will not bode well for the organization.

            How about getting staff involved with training, streamlining, process improvement.

            Bringing these types of management decisions to the board for approval is just nonsensical.

            But, as I said. Future boards will be able to repair the damage.

            Donald

          • J Gallagher

            Staff was involved and driving many of the improvements. The CFO and CEO attend Fiscal Committee meetings. They were active participants in the development of the policies. Committee members provided another set of eyes and input where needed. It was a collegial process – yet you continue to make these statements that the changes were forced on staff – many of the changes were driven by staff – your assumptions here are flat out erroneous.

          • Donald

            So you say.

            Let me take you off procurement for a minute. In your opinion, who is responsible for hiring senior staff?

            Donald

          • J Gallagher

            I say because I am there, attending meetings and doing the work. You say these wild things and you were not even there – it makes me doubt every thing you stir up. And people read this and they give you the benefit of the doubt and it’s damaging. I was one of the biggest critics of RA’s policies but feel like RA staff and volunteers are working very hard to right the ship (Board and staff – not all of whom are aligned) – they are all working hard to restore trust and you continue to spout that we hate RA staff etc., creating dissension that is just not there. I think you like the drama that you cause. The fact is there is no drama here – the procurement policies will help to increase accountability within the organization and improve trust from outside the organization. I tell everyone who asks me about RA that they are workin hard to right the ship – do you?

          • Donald

            Uhh, yea.

            Care to answer my question?

            Donald

          • J Gallagher

            No I am not commenting on hiring of the CEO – it’s out of my swim lane

          • Donald

            God, please read the message. I asked about senior staff. Not the CEO.

            Who is responsible for hiring senior staff?

            Donald

          • J Gallagher

            I gave you my answer – hiring is out of my swim lane.

          • Donald

            But, hiring is a big expenditure.

            Donald

          • J Gallagher

            You asked who should hire the staff

          • Donald

            Actually, for the third time, I asked:

            “Who should be responsible for hiring senior staff?”

            These people can be expensive. Who signs off?

            Donald

          • J Gallagher

            Not me!

          • Donald

            The reason I ask. According to the minutes of the last board meeting, the board directors voted unanimously, via email, to spend $130,000/ year (plus benefits) for a new in house counsel.

            Again, this was found hidden (after the minutes,) in the consent calendar.

            Also, Mr. Wood is now eligible for an additional bonus, for his service as acting CEO.

            So, for two year budgeting purposes, where will the board find an additional $260,000 to $300,000?

            When were the members going to be informed of these decisions? Were internal procedures used or circumvented?

            I trust the board acted appropriately, but, this item is not easily known by the members, unless they go to the Reston websit, find the board packet, and happen to go to page 13 of the consent calendar. It’s there with lake use requests and volunteer appointments. This motion will pass without objection, via one motion.

            Donald.

        • J Gallagher

          I hear what you’re saying but one correction – the purchase orders don’t go to the Board – this is the internal process for staff to follow – the purchase orders go to the CFO not the Board. And honestly the CFO has already put many of these policies in place…we (on Fiscal Committee) documented and formalized these policies so that current staff and new staff coming in know how to request funding for purchases. So these documents don’t go to the Board – they go internal and we have not heard that there have been any delays with approval processes for purchasing.

          • guest

            Thank you for your response. It still seems as if it may take a while for this process during the summer, especially if the CFO is also the acting CEO. It could take a week for something(camp/pool related) to be approved if he’s out sick or the agencies take a long time to respond with quotes. I pay for my child to attend RA Camps, so I’m assuming the program pays for itself. Why would there be a process for shirts or teen camp trips if I’m paying $500 for my teen to attend the camp? What happens if someone vandalizes the pool again this year? Will it get fixed right away or will we have to wait? Are there provisions for these issues? Again, I think the protocols are a great thing. I just don’t think it should be a one shoe/size fits all kind of approach. The summer has not approached, so we have yet to see how this will work during “busy season” for camp and pools and what kind of delays this may cause. Thank you again

          • J Gallagher

            Have you had to wait for pools to be fixed in previous years? I am just curious – I don’t have kids in camp…but totally understand that if you’re paying $500 you want to get what you paid for.

          • guest

            Actually, I haven’t had to wait before at the 3 pools my family use frequently, even after one was vandalized and another had a broken part. It was actually taken care of quite swiftly. I asked the question, because if this practice was not in place in previous years, how will it effect how fast things (again pools and camps) are taken care of now? This is an easier process now, because pools aren’t open, all the tennis courts are not in use, and camp is not in full swing. My question is in regard to the CFO acting as the CEO(doing 2 jobs) as well handling all these matters at one time when all facilities are open. I just think it should not be one size fits all when it comes to certain pool fixes(like vandalism and something breaks). Is there a plan for this? Is there a plan in case he’s out due to illness or a family problem or do we just wait? Was this discussed?

            Why are camps included in this, when camp pays for itself? If you look at the budget report from last year on the RA site(looked last night). It shows that the camps pay for themselves and their revenue actually goes to Lake House and into the RA budget as well. I’m just not understanding why a camp program that pays for itself is included. I know last year and the years prior they went on great field trips and if the weather was bad and they had to change plans they would make the change that morning to another field trip location and my children still had a wonderful time. Under this new system how will this work?

            Great plan, but it should not be a one size fits all when it comes to a program I spend almost $3000 a summer for. I’ll contact my director in regard to this matter. For the 1st time in years my children may not be attending RA Camp and I know a few more parents that may feel the same way. I’ll wait to make my decision until after they discuss this in the Board meeting and I receive a replay back. Thank you for the reply

          • J Gallagher

            I think these processes have been in place for a while – the CFO has been in there for a few years and was very eager to get them on paper – as was the committee so that we understand how purchases are made – I’ve just met him this year but he is top notch and I know works very hard (after hours) to keep things running. I think some of these processes may actually speed purchasing because there are clearer roles and responsibilities and a definite process for staff to follow – avoids delays asking questions about the process which slows things down – I personally think you won’t see a change in level of service – that staff seems to be very efficient.

          • guest

            Thank you again for responding. You didn’t answer my questions, but you did respond and try to give an explanation the best you could. I have emailed the Board and plan on listening to them discuss this tomorrow evening from work(I work evenings and and second shifts, so I can’t attend meetings). I hope they will bring up my questions and concerns.Thanks again

      • Donald

        It’s a fait accompli.

        According to the board packet, the board won’t even discuss this item.

        More of the same from last year.

        Donald

  • Donald

    Looks like there will be no board discussion on this topic. Just saw these new rules are on the Consent Calendar with the approval of minutes, to be passed without objection.

    Sad, just very sad.

    Donald

    • J Gallagher

      You complaining online isn’t gonna get it done – Attend the meeting, speak for your 3 minutes – ask the Board to open discussion of the issue – that’s what “member comments” section is for

      • Donald

        Point taken.

        Donald

        • J Gallagher

          That’s garbage – you can go and ask during your three minutes for additional time to comment when the issue is discussed – and you can provide input beforehand via email (if the polices are included in the packet) – that’s what s lot of people do. I have seen both of these done. It’s just much easier to complain online anonymously – there’s hardly anyone at any of these meetings, but lots of people complaining online.

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