FHWA/MoDOT Partnering Agreements

PARTNERSHIP AGREEMENT BETWEEN
FHWA AND MODOT FINANCE TEAMS and MODOT AUDITS AND INVESTIGATION UNIT

PURPOSE OF THIS AGREEMENT

The purpose of this Agreement is to set forth the general terms and conditions for collaboration in project close-out processes between FHWA and MoDOT for the purpose of enhancing the quality and effectiveness of the existing FHWA/MoDOT partnership so that partners can work together at achieving mutual transportation priorities. This Agreement applies to the MoDOT Financial Services (FS) and Audits and Investigations (AI) Divisions’ staff and the staff of the FHWA Missouri Division Office responsible for the management/oversight of financial activities.

AGREEMENT FOCUS AREAS

FHWA and MoDOT shall carry out the terms indicated in this Agreement resulting in effective communication and streamlined project closeout processes for projects.

GROUND RULES

The following ground rules apply to the development and execution of each element of this Agreement. We agree to concentrate efforts in improving our joint work by following these ground rules.

• We will implement activities covered by the agreement in a mutually supportive manner by demonstrating respect for others opinions and maintaining an open mind to suggestions.
• We will make timely decisions following a thorough discussion of the issue using appropriate communication methods and evaluation of data consistent with applicable laws.
• We will promote good financial practices and make current best practices our method of conducting business.
• We will recognize the timeliness and quality of our cooperative effort to comply with federal requirements and closeout projects. We will collaborate to achieve mutual objectives, goals and initiatives and ensure policies are clear and concise.
• We will make decisions following a thorough discussion of the issue using appropriate communication methods. Timely decisions should be made following discussion.
• We will ensure internal controls exist within MoDOT and FHWA to properly manage federal funds.

ROLES AND RESPONSIBILITIES

Project Close Out and Agreed Upon Procedures

1. MoDOT and FHWA will manage project closeout.
2. MoDOT and FHWA will ensure full utilization of available funds.
3. MoDOT and FHWA will take proactive measures to manage inactive projects.

Finalize Projects

Applicable to Projects available for close out

1. MoDOT and FHWA will close projects on a timely basis. The timelines below are contingent on documented unique factors impacting the project closeout process.
   • FS will maintain an electronic listing of all project files available for engagement procedures. Availability will be determined based on final invoice received from vendor.
   • AI has unrestricted access for audit or engagement to any and all project files, closed or otherwise, as authorized in the Audit Charter of the Missouri Highways and Transportation Commission’s (MHTC) Audit Committee.
   • FS will provide AI access to the electronic list of projects available for engagement procedures each calendar quarter.
   • AI will select projects from the list for engagement. The selection will be made using any of the following methods:
     • Block sampling
     • Ranaom selection
     • Systematic selection
     • Judgemental selection
     • Special requests or known project issues
   • AI will select and perform engagements based on risk assessments and agreed-upon procedures in accordance with Government Auditing Standards.
   • The sample size selected for potential engagements will be 10-15% of federal projects and 10-15% of state funded projects. The sample size may be expanded or reduced based on risk assessments.
   • AI will communicate to FS as soon as possible, but no later than ten (10) business days after the end of the quarter those projects AI has selected for potential engagements.
   • FS will maintain the selected projects until AI requests the project file for engagement procedures.
   • As part of the quarterly inactive reviews, AI will provide FS a list of all current projects selected and still held for engagement procedures. AI will continue to monitor the number and age of projects in AI’s office under engagement. The number of engagements should not exceed 150, excluding those under protest. The number of projects in AI will fluctuate due to variables in block engagements, complexity, workload, and cooperation of auditee. If the number of project files maintained by FS for AI approach 150, AI will select a smaller sample size to control the backlog.
   • As part of the quarterly inactive project reviews initiated by FHWA and FS, AI monitors final invoice dates of selected projects. Upon determination of project dates approaching or meeting the three-year mark or inactive status, AI reviews the project file to determine if there are any obvious issues and then de-selects the project if none are noted. FS is notified of the de-selected projects so they may begin the close out process.
   • FS will close all projects not selected for engagement.
2. MoDOT and FHWA agree FS will randomly review documentation that supports charges for reimbursement prior to closing projects not selected by AI.
3. MoDOT and FHWA agree closed projects may be reopened and subjected to engagement procedures based on written justification and approval by the AI Director and coordinated with FS and FHWA Transportation Financial Manager. It is agreed that requests to have closed files reopened will be held to a minimum as to not create additional workload on staff.

PERFORMANCE EVALUATION

We will measure our partnering progress and success by the following performance indicators:

1. New projects’ final vouchers will be processed and approved by FHWA by the end of the quarter following the quarter they are available for engagement selection by AI and are not selected by AI. An explanation will be provided if this time line is not met.
2. FHWA will provide federal oversight, in collaboration with MoDOT, as it relates to the best practices in close out processes.

CONFLICT RESOLUTION

Historically, FHWA and MoDOT have benefited from an excellent working relationship. This Agreement builds upon this history by establishing a framework to further promote the existing partnership. This Agreement establishes the following procedures to resolve conflict, streamline processes, and build a team spirit to achieve maximum success.

1. We will confer on a regular basis. If there is a major programmatic issue, the party bringing the concern to the table shall communicate the concern by e-mail or letter.
2. We to the maximum extent possible, that issues involving the two agencies shall be resolved at the staff level.
   1. When issues arise that cannot be resolved within one week at the staff level, we agree resolution of the issue will be sought at the staff manager level.
   2. When resolution of the issue cannot be realized at this management level, we agree the issue will be elevated to the MoDOT FS and AI Directors and FHWA Program Management Team Leader level. Issues unresolved within one week at the second level will be elevated to the MoDOT Chief Financial Officer and FHWA Assistant Division Administrator.

If issues are still unresolved, they will be elevated to MoDOT Director and FHWA Division Administrator.

COMMUNICATION WITH MANAGEMENT

We will keep senior management informed of our activities and how our partnering is working quarterly through verbal communication. If issues have not been resolved and require action of senior management, a written communication regarding the issue will be shared with senior management and members of this agreement. The communication will include:

1. Issues that require resolution.
2. Successes, challenges and new projects.
3. Our efforts to enhance communications and better working relationships with the members of this agreement and other focus area teams.

We will revisit and revise this agreement as deemed necessary. At a minimum the agreement will be revisited annually.