hillard heintze report

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annual report2010

T H E M E T R A O F F I C E O F I N S P E C T O R G E N E R A L

METRA AT THE THRESHOLD OF 2011: ON TRACK TO ADVANCINGA CULTURE OF TRANSPARENCY AND ACCOUNTABILITY

THE METRA OFFICE OF INSPECTOR GENERAL

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2 ON TRACK TO ADVANCING A CULTURE OF TRANSPARENC Y AND ACCOUNTABILITY

ABOU HIS PUBLICAION

Tis report outlines Hillard Heintzes activities from May 26, 2010, the date

of its authorization as Inspector General, through December 31, 2010.

In addition to reporting on the Interim Inspector Generals activities and

accomplishments during this seven-month period, it identies several signicant

challenges the Metra organization and the Metra OIG will face in 2011 as well

as our recommendations on how to address these in the year ahead.


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TABLE OF CONTENTS

Message from the Metra Inspector General 5

Prole of the Metra Ofce of Inspector General 11

Prole of Metra 15

Actions Taken: Launching the New Metra OIG 19

Establishment of Hotline and Intake Procedures 19

Formalization of Core Processes 20

Outreach and Education 22

Actions Taken: Communications and Reporting 25

Advisory Counsel to the Board 25

Strategic Guidance on Program Development 26

Actions Taken: Investigation of Complaints and Allegations 29

Special Areas of Focus: Discipline, Hiring and Promotion, 30

Nepotism, Safety and Procurement

Key Challenges in 2011 37

Expanding the Focus to Audits, Inspections and Evaluations 38

Championing the Importance of Ethics, Integrity and Fairness 38

Building a Long-Term Program that is Effec tive and Efcient 39

Interim Metra Ofce of Inspector General Financial Information 43

Appendix A: Metra Board Ordinance Number 10-4 45

Appendix B: Metra OIG Advisory Memorandums 47

annual report2010THE METRA OFFICE OF INSPECTOR GENERAL


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I am pleased

to report to the

Metra Board andto the citizens

of Illinois that

we found no

evidence of

widespread or

institutionalized

fraud, waste

or abuse in

the Metra

organization.

message from the metra nspector general

On May 26, 2010, the Metra Board of Directors selected Hillard Heintze to serve asInterim Inspector General for the newly created Metra Oce of Inspector General(OIG). Te appointment came at a dicult time for Metra. A few weeks earlier,Metras long-time Executive Director, Phil Pagano, stepped in front of a movingMetra train and was killed in an apparent suicide. Tis tragic event occurred just ascriminal investigations into his alleged misconduct began to mount and just hoursbefore a Metra board meeting was scheduled to determine his status withthe organization.

In the aftermath, Metra confronted a surge of allegations and complaints from

individuals in various parts of the organization, and faced other sudden challengesfrom internal and external stakeholders questioning the integrity and eectiveness ofits services, practices and operations. Tese events led to Metras decision to createthe Oce of Inspector General (see Appendix A) and authorize Hillard Heintze toassume these responsibilities immediately in an interim capacity.

RESpONdiNg TO AN AgENCy UNdER FiRE: ThE EARLy pRiORiTy

On our rst day of service, the Chairman of the Metra Board transferred 11complaint case les to us. Over the next 30 days, we received an additional 42

complaints, bringing the rst months total to 53, which exceeds the number ofcomplaints typically received annually by similarly sized inspectors general in thepublic transportation sector.

Troughout the remainder of the year, we continued to receive a steady stream ofcomplaints 104 in total by December 31, 2010. After the rst few complainantshad been interviewed, and individuals across the Metra organization learned aboutthe Oce of Inspector General and its purpose, many more employees steppedforward to air grievances.

While many organizations deal with individuals seeking personal gain through falseallegations, we were pleased most complainants appeared to be more concerned

about improving Metra than receiving personal reward or compensation. Te highnumber of complaints drove our early focus on complaint investigation a focus thatremained a leading priority for the duration of the year.


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6 ON TRACK TO ADVANCING A CULTURE OF TRANSPARENC Y AND ACCOUNTABILIT Y

SERiOUS iSSUES BUT NO EVidENCE OF WidESpREAd OR iNSTiTUTiONALiZEdFRAUd, WASTE OR ABUSE

Te majority of the complaints shed light on an agency with signicant challenges primarily related to perceived

or actual misconduct in management and personnel-related matters. Only a few of the complaints allegedcorruption. Many of the complaints were several years old and others had previously been adjudicated throughthe legal system or resolved through arbitration. Te most prevalent theme concerned a belief or perception ofmistreatment on the part of employees.

As we assess our 2010 activities as the Metra Inspector General, I am pleased to report to the Metra Board andto the citizens of Illinois that we found no evidence of widespread or institutionalized fraud, waste or abuse inthe Metra organization. In fact, our investigations led us toward a very dierent perspective. At an operationallevel and subject to the results of OIG audits, inspections and evaluations that should be carried out in 2011 Metra appears to be eective and ecient in carrying out its core mission: delivering suburban rail transportationservices to Chicagos citizens and visitors as well as patrons from Cook, DuPage, Kane, McHenry, Lake and

Will counties.

ThE KEy ChALLENgES AhEAd: CONTiNUiNg TO diSpEL ANd diSmANTLE ThENEgATiVE FACETS OF ThE pAgANO LEgACy

Metra, however, is not without serious internal issues. At this stage in our examination, it is clear that the vitalchallenge for Metra is addressing a number of critical management issues that span the agency issues largelycreated, directly or indirectly, by the former Executive Director. It is important to point out that Metra is anagency that was directed, in great measure, for over two decades by a single individual, Phil Pagano.

While Paganos management style was clearly autocratic and he made the most important decisions himself,he also allowed select subordinate managers wide latitude in administering their individual domains in a

decentralized, uncoordinated and disparate manner. Te secretive Pagano documented very little and releasedinformation only when he had no other choice. We learned of a specic instance, for example, in which hepurposely misinformed Metras Board, employees and others in order to accomplish his goals, retain control andprevent discovery of his conduct and practices.

In 2010, the Metra Ofce of Inspector General did not

investigate any allegations against former Executive Director

Phil Pagano as these matters were being addressed by various

authorities including the FBIs Chicago Ofce, the Ofce of

Inspector General for the U.S. Department of Transportation

and the U.S. Attorney Generals Ofce. Instead, our mandate

was to refer any information or evidence potentially related

to Paganos alleged civil and criminal activity directly to the

appropriate authorities.


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Over time, Paganos inuence undermined the Metra organization in pervasiveand destructive ways. His policies and practices embedded inconsistencies inmanagement and policy. In the course of our investigations, we encountereddecision makers at all levels of the organization acting in accordance with theirperception of policy as established by the former Executive Director. Tesesubjective interpretations varied signicantly by manager and department. Teharmful impact of Paganos legacy lingers resulting in an atmosphere of deepmistrust and disillusionment among many employees and a corrosive lack oftransparency that is only just beginning to lift today.

FROm BOARd ANd mANAgEmENT TO EmpLOyEES:STRONg ANd UNqUALiFiEd SUppORT FOR ThE Oig

Tere are two major inuences on our work this year that I would like toemphasize. One is the fact that OIG investigators found Metras Board,management and employees supportive and ready to assist in investigationsand fact nding. We found Metras internal stakeholders to be routinelycandid about the organizations strengths and weaknesses, and often enthusiasticabout opportunities to improve the agency. Within Metras ranks are a largenumber of talented and dedicated individuals with detailed knowledge abouttheir respective domains.

Te other factor I would like to highlight is our independence arguably thesingle most important cornerstone of the OIG function. When we accepted thistask, we did so with the understanding that we would function independentlyand that investigations could and would follow their natural course in whateverdirection they led uninterrupted and uninuenced by the Board, management or any external entities.

Metra Board Chairman Carole Doris not only allowed us to act independently, she insisted upon it. Troughher own actions and the clear example she set for the Board and the organization as a whole, she reinforcedthe importance of this guiding principle.

ThE SECONd pRiORiTy: dEFiNiNg ThE CORNERSTONES OF ABEST-pRACTiCE iNSpECTOR gENERAL FUNCTiON

While the majority of our activity in 2010 concentrated on traditional OIG investigations, we also focused,as originally tasked by the Board of Directors, on advising Metra on the establishment of a permanent OIGfunction and making recommendations on budget and necessary regulations required for the eective operation

of the Oce.

On August 11, 2010, we submitted a comprehensive report on these matters to Metras Board titled Launchingthe New Metra Oce of Inspector General. Te report set out a practical and achievable vision for the new MetraOIG, outlining three scenarios for launching the permanent Metra Oce of Inspector General. It also presented15 strategic recommendations on how best to establish a strong, independent and sustainable function in the mostpractical and cost-eective way. Lastly, this report outlined recommendations on how to grow, evolve and renethe OIG over time as a well-founded, high-performing oversight function that plays a strategic role in advancingthe Metra mission, service delivery and reputation.


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REViTALiZATiON OF mANAgEmENT: ThE TRACK TO A BRighTER FUTURE AT mETRA

While we are condent in our opinion that Metras need for an Inspector Generals Oce to addressand prevent fraud, waste and abuse is valid, strategic and continuing, many of the issues at Metra can be

addressed through a dynamic revitalization of management. Tis requires a close and ongoing examinationof people, policies, procedures and standards and a sustained focus on reforming these to align with leadingmanagement practices in use today.

Based on information identied during individual investigations as well as strategic insights andconclusions reasonably gathered from patterns evident across multiple allegations, complaints andinvestigative cases we have made recommendations throughout the year to the Metra Board on ways toenhance transparency and improve performance.

Tis counsel has taken the form of phone calls and conferences, in-person meetings and an ongoing series ofOIG Advisory Memorandums on management issues relating to administration, operations and nance (see

Appendix B). Over the course of 2010, we developed posters and pocket cards to build awareness among

Metra employees, contractors and the general public of the role of the Inspector General and how to le agrievance or complaint. Te posters, which are discussed in detail later in this report, will be displayed intrains and Metra facilities beginning early in 2011.

mANAgiNg Oig COSTS iN 2011 ANd BEyONd:AN EmERgiNg iSSUE

It is important to place the OIGs activity over its rst sevenmonths of operations within the context of its mandateover the next 12 months and in the years to come. Terst year has required a concentration almost exclusivelyon investigating complaints and the deferral to 2011 ofother common OIG responsibilities (audits, inspectionsand evaluations). While the annual Metra OIG budgetcosts are likely to atten and stabilize over time (assuminga moderate number of investigations, audits, evaluations

and inspections), an emerging challenge will be how to best contain and control OIG-related costs withoutundercutting the functions mission and performance.

As outlined in our report on establishing a strong, independent and sustainable OIG function described

in detail in this report we see three strategic options confronting the Metra Board. Te rst is to fund andestablish a full-scale, in-house function. Tis is the most common option among government agencies, onethat we estimate would cost Metra $1.2 million to $1.5 million per year. Te second option is to outsourcethe entire function to a third party such as an Independent Private Sector Inspector General, a strategy weestimate would cost between $500,000 and $700,000 in its rst year. Te third option is to craft a hybridsolution by combining aspects of an in-house OIG with those of an external provider at a cost we estimateto range between $700,000 and $900,000. We outline the various advantages and disadvantages of thesethree strategic options at the end of this report.

In 2010, MetraOIG funding totaled$700,000.

Actual OIG costsfor the year totaled$688,411.


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ThE ChALLENgES AhEAd

In conclusion, I want to thank Metra Chairman Carole Doris, Metra Board members and Metra employees forthe support they have provided throughout the year to our oce and to our investigators. I would also like tocredit their courage and consistency, among other factors, with our shared success in capitalizing on the uniqueadvantages inherent in the Inspector General function such as independence and objectivity and their crucialrole in helping to advance reforms at Metra systematically, day after day and month after month.

I address my nal comments to Metra stakeholders directly. As a new year begins and we collectively raise thebar on what we expect the OIG and Metra to accomplish we look forward to working closely with you onyour vision of establishing Metra as one of the best suburban commuter rail systems in the country. It will takea great deal more work. It will involve sacrices and compromises. It will require hard choices and sometimespainful changes to the status quo. But, in the end, it will be enormously rewarding.

At the threshold of 2011, we see a renewed Metra beginning to emerge.

HILLARD HEINTZE LLC

Arnette F. Heintze


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prole of the metra oce of nspector general

ViSiON, miSSiON ANd AUThORiTy

Vson: As the Interim Oce of Inspector General, Hillard Heintze will provide Metras employees, customers,the public and the Metra Board of Directors with the integrity, independence, objectivity, accuracy, vigilance andother important guiding principles vital to identifying and resolving issues of fraud, waste and abuse at Metra continuously delivering to all Metra stakeholders the highest quality in OIG services.

msson: As Metra OIG, Hillard Heintze will conduct and supervise independent investigations, proactivelycarry out inspections and evaluations, and perform audits of Metra activities to deliver on our mandate byBoard ordinance to investigate allegations of fraud, waste, abuse, mismanagement, misconduct, nonfeasance,misfeasance and malfeasance in order to root out wrongdoing, improve eciency and eectiveness and promoteand advance a culture of integrity, transparency and accountability at Metra.

Autorzaton an manate: On May 26, 2010, the Metra Board of Directors passed Ordinance Number 10-4.Tis Ordinance articulated the Metra Boards commitment to honest and ecient operation of commuter railservices and armed its belief that the establishment of a new Metra Oce of Inspector General (OIG) wouldsubstantially further these goals.

Te Ordinance also (1) established the OIG and gave the Oce jurisdiction over Metra, including its operatingcorporation, the Northeast Illinois Regional Commuter Railroad Corporation (NIRCRC) and all Boardmembers, ocers, employees, contractors, subcontractors, suppliers and others doing business with Metra; and(2) charged it with investigating allegations of fraud, waste, abuse, mismanagement, misconduct, nonfeasance,misfeasance and malfeasance with respect to Metra. (See Appendix A)

gUidiNg pRiNCipLES ANd VALUES

We view the Metra OIG vision and mission as both drivers and outcomes of our core values and beliefs asexperienced professional leaders with lifelong commitments to pursuing excellence in security and investigativeplanning and oversight and, more importantly, as individuals with deep personal integrity. Our core values andbeliefs include the following:

We insist on excellence in everything that we do.

We are committed to the highest standards of ethics, integrity, character, trust and condence.

We strive to exemplify diversity. We value inclusion. We approach everyone with respect.

We pay acute attention to detail. We know from experience that in our line of work it represents oneof the most crucial determinants of success.

We speak the truth and communicate with candor.

We place an enormous emphasis on collaboration and teamwork among ourselves, with our clientsand within our network of professional colleagues, security specialists and business partners.


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ThE hiLLARd hEiNTZE ANd mETRA iNTERim OFFiCE OF iNSpECTOR gENERALCOdE OF pROFESSiONAL iNVESTigATiVE EThiCS*

Every member of the Metra Interim Oce of Inspector General ascribes to the Hillard Heintze

Code of Professional Investigative Ethics:

We shall demonstrate, at all times, a commitment to professionalism and diligence in theperformance of our duties.

We shall not engage in any illegal or unethical conduct, or any activity which wouldconstitute a conict of interest.

At all times, we shall exhibit the highest level of integrity in the performance of all professionalassignments, and will accept only assignments for which there is reasonable expectation that theassignment can be completed with professional competence.

We will comply with lawful orders of the courts and will testify to matters truthfully andwithout bias or prejudice.

In conducting investigations, we will obtain evidence or other documentation to establish factsand a reasonable basis for any opinion rendered.

We shall not reveal any condential information obtained during a professional engagement withoutproper authorization.

We shall reveal all material matters discovered during the course of an investigation which, if omitted,could cause distortion of the facts.

We shall focus upon evidence, not the status, rank or position of the parties to the investigation.

We shall continually strive to increase the competence and eectiveness of professional servicesperformed under our direction.

* Adapted from the American Society for Industrial Security (ASIS)

ABOUT hiLLARd hEiNTZE

Hillard Heintze provides the strategic thought leadership, trusted counsel and end-to-end services that

help leading public and private corporations as well as government agencies and major public service

organizations advance best-in-class security strategies and investigations to protect and preserve the safety

of their people, property, performance and reputation.

Formed in 2004 by Terry Hillard and Arnette Heintze, the rm

today is considered by many of its clients, its professional peers

and its competitors to be one of the leading private strategic

security advisory and management companies in the United

States. With global headquarters in Chicago, Hillard Heintze

has operations in Washington, DC, Dallas/Fort Worth, Denver,

Raleigh and Miami, as well as operating capabilities in the

Middle East and both South and Central America.


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LEGAL

JOHNSTON GREENE

AUDIT

BLACKMAN KALLICK

METRA BOARD OF DIRECTORS

CHAIRMAN

METRA BOARD OF DIRECTORS

Carole Doris

METRA

INSPECTIONS AND

EVALUATIONS

INVESTIGATIONS

INTERIM INSPECTOR GENERAL

Arnette F. Heintze

MANAGEMENT POLICY AUDIT

RESEARCH AND ANALYTICS


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prole of metra

Metra is a suburban rail system that serves the city of Chicago, Illinois andsurrounding suburbs. Metra oversees railroads that serve all commuter railoperations in the 3,700 square mile Northeastern Illinois region.

Te current Metra system is comprised of 11 separate commuter lines radiatingnorth, west and south of downtown Chicago. Services are provided by thefollowing rail lines: the Milwaukee District, Rock Island District, MetraElectric and Heritage Corridor, Southwest Service and North Central Service as well as contract services provided by commercial carriers. Contract servicesare presently operated by the Burlington Northern Santa Fe Railroad Company,Union Pacic Railroad Company and the Northern Indiana Commuterransportation District.

Geographically, Metra is the largest and one of the most complex commuterrail systems in the nation. Since Metra assumed railroad operations inNortheastern Illinois, ridership has grown by 54 percent an average annual

growth rate of two percent and train miles have increased by 37 percent.More than 700 trains each weekday serve the Metra systems 240 stations.In 2010, Metra provided an estimated 81 million rides.

Metras rail

system is

comprised of

11 rail lines

operating over

more than 1,100

miles of track and

800 bridges.

The railroad

has more than

1,000 pieces of

rolling stock,

more than 2,000

signals, 23 rail

yards and seven

maintenance

facilities.

More than 700 trains

each weekday serve

the Metra systems

240 stations.


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35th St.(under construction)

Museum Campus/11th St.


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actons taken: launchng the new metra i

ESTABLiShmENT OF hOTLiNE ANd iNTAKE pROCEdURES

On May 26, 2010 the day of our authorization Hillard Heintze established a Metra OIG hotline forcomplaints: (877) 482-4962. By days end, we briefed all members of the Hillard Heintze team who would beserving as principal OIG investigators or supporting the Metra OIG in any capacity and provided key individuals

with specic guidance and direction on their roles, responsibilities and tasks.

Te next morning, the Metra OIG team began investigating the 11 case les provided by Metra Board ChairmanCarole Doris the day before. After four weeks, the total number of case les received by the Oce increased to53 approximately the full annual complement of cases investigated by other similarly sized OIG functions in thepublic transportation sector.

Key highlights o the Metra OIG hotline and intake process in efect rom the morning o May 27, 2010 to present include:

Te OIG accepts complaints or referrals from any Metra employee, member of the public or anyperson who wishes to le a complaint or register a concern about Metra.

Te Oce accepts complaints or concerns in person or via telephone, email, facsimile or U.S. mail.Complaints may be made anonymously.

Te Metra OIG hotline number is published through multiple channels, including yers distributedthroughout Metra facilities, bulletins on Metra trains, press releases and media exposure through

local print and television coverage.

Te Metra OIG hotline is staed during business hours and available to record messages andaccept faxes at other times. Web inquiries are accepted at all hours, any day of the week andare reviewed immediately.

Additional intake policies and practices include the ollowing:

Every complaint received is reviewed by investigative and analytical specialists on theMetra OIG team.

Every interview with a complainant is conducted in person whenever possible.

Te OIG team does not provide legal opinions or advice to complainants. Instead, it informseach complainant about the role of the OIG to identify and investigate fraud, waste and abuseat Metra and makes it clear that the OIG is not acting as the complainants legal counsel, advocateor solely on his or her behalf.

If the complaints issue is outside the scope of the Metra OIGs mandate, it is referred to anappropriate agency depending on the nature of the complaint.


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FORmALiZATiON OF CORE pROCESSES

Te next step in establishing the new OIG was dening and formalizing core processes. A brief outline ofthese distinct procedures is presented below.

investatons: Metra OIG investigations cover a variety of complaints, but must meet the Metra Boardsmandate involving fraud, waste and abuse concerning employees, contractors, consultants or other entitiesconducting business with Metra.

Te process typically starts with the receipt of an allegation. Te investigator assigned to a case conductsa preliminary review and interviews the complainant to determine if an investigation is warranted. If aninvestigation is warranted, the case is formally opened and pursued based on OIG priorities and procedures.

When issues do not fall within the OIG mandate but require action by Metra, they are referred to Metra sta for aresponse. Te OIG monitors the progress of these referrals to determine whether actions taken by Metra sta areappropriate and aligned with Metra policies. By mutual agreement with Metras Acting Executive Director, Metrahas committed to responding immediately to all matters referred to it by the OIG and providing updates every 30

days until the issue is resolved.

Auts: OIG audits are generally independent reviews of business assets or practices related to areas such asnancial reporting, accounting, human relations, information technology, information security, cost management,pricing, sales strategies and compliance with contractual requirements or with federal, state and local regulations.Given the high volume of initial complaints and Metras contractual relationship with the audit rm BlackmanKallick since the onset of the Pagano investigation, the OIG did not initiate any audits in 2010. As the MetraOIG expands its activities in 2011, a signicant amount of time will be spent reviewing and acting upon anyndings in Blackman Kallick s 2010 audits. By late 2011, fullling the OIG mandate will require ensuring thataudits begin in the areas of Metras internal controls, nancial reporting and information security.

insectons an Evaluatons: Carried out proactively and sometimes on a planned schedule, OIG inspectionsand evaluations allow the Oce to gain critical insight into the agencys operations with less formality thanrequired by a full-scale investigation or audit. While inspections and evaluations were not a priority for the MetraOIG in 2010, they will begin to play an important role in OIG oversight later in 2011.

CORE pROCESSES

What are the actions that Metra OIG investigatorstake in a typical investigation?

Conduct interviews

Collect evidence Undertake surveillance

Review Metra policies

Examine employment les

Review information with auditors or legal staff

Consult with prosecutorial agencies and other

third-party authorities


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No

Yes

No

No

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A Visual Guide to the Metra OIG

Complaint Process

Yes

Yes

Yes

Referred to Metra ExecutiveDirector for DisciplinaryConsideration/Process

Case ClosedCondential Report


Referred toAppropriate Authority


Complaint InitiatedThrough Hotline, Fax, Web

or In Person

Preliminary Review forJurisdiction and OIG

Mandate Compliance

OIG Closes or RefersComplaints Not Meeting

Jurisdiction/Mandate

OIG Investigator InterviewsComplainant - Determines ifInvestigation is Warranted

Investigation InitiatedComplaint Founded

Findings AgainstIndividual or Metra

Advisory Memorandum -Policy Recommendation

Report toChairman

PotentialCriminalActivity


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DO YOU HAVE INFORMATIONON FRAUD, WASTE OR ABUSE?

If so, email the Metra Ofce of Inspector General at [email protected].

Or call the Metra OIG Hotline 24 hours a day, 7 days a week, at:

(877) 482-4962

INTERIM INSPECTOR GENERAL


The new Metra Ofce of Inspector General (OIG) is now rmly in place fullyindependent of Metra but aligned in the same direction. Working every day toward

ensuring vigilance, accuracy and integrity across every facet of the organization.

Its your Metra.And its your new Metra OIG.

Same trains.A clearer direction.A brighter future.


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OUTREACh ANd EdUCATiON

In 2010, the Metra Oce of Inspector General began developingan awareness campaign to support its mission. In addition to pressreleases, pocket cards and other channels of outreach, the OIG teamdeveloped several posters that will be displayed in Metra trains,stations and the administrative oce in 2011.

Tese posters are designed to inform all key internal and externalstakeholder audiences including Metra employees, suppliers andcontractors as well as the public of the creation and existence of theIG function, its purpose and primary activities and the importance to

Metras future of reporting any information pertaining to incidents offraud, waste or abuse.

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The Metra OIG maintains a hotline to report

allegations and other irregularities in Metra

programs or operations. Allegations may be

reported by Metra employees, contractors or

members of the general public. The Metra OIG

Hotline is available 24 hours a day, 7 days a week.

To report an allegation of fraud, waste, abuse

or mismanagement at Metra, you may do so byusing one of the following methods:

Phone: 877-482-4962 (Metra OIG Hotline)

E-mail: [email protected]

Mail: Metra Ofce of Inspector Generalc/o Hillard Heintze30 South Wacker Drive, Suite 1730Chicago, Illinois 60606

Why was the MetraOfce of Inspector General

(Metra OIG) established?

To provide increased accountabilityand oversight of the agency.

To assist in improving agencyoperations.

And to deter and identify waste, fraud,abuse and illegal acts.


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actons taken:communcatons and reportng

AdViSORy COUNSEL TO ThE BOARd

Troughout 2010, the Metra OIG was in regular communication withChairman Carole Doris and the Metra Board of Directors.

Tis communication centered primarily on information emerging fromindividual investigations as well as strategic insights and conclusions reasonablygathered from patterns evident across multiple allegations, complaints andinvestigative cases.

While discussions and exchanges typically took the form of phone calls,conferences and in-person meetings, the most formal counsel includedsubmission of strategic advisory memorandums to the Metra Board Chairmanon a range of management issues.

Tese Metra OIG Advisory Memorandums were designed to help ensure thatsome of the more critical issues emerging from investigations especiallythose that collectively suggested a pattern of inappropriate or inecientorganizational practices or behaviors resulted in concrete change at variouslevels within the Metra organization.

Te brief, two-page memorandums contain three sections generally focused on:

(1) the strategic issue and its broader context; (2) examples or implications forMetra; and (3) a numbered set of specic recommendations to the Board andMetra management on strategies for correction, mitigation and improvement.

Te four 2010 Metra OIG Advisory Memorandums 2010-1, 2010-2, 2010-3and 2010-4 (see Appendix B) address the following topics:

Dening a Clear, Actionable and Long-erm Strategic Plan

Improving the Discipline and Enforcement Process

Reinforcing the Importance of Ethics and Integrity

Making Hiring and Promotion More ransparent

Metra employees

have been very

cooperative and

receptive to OIG

requests.

OIG investigators

requested dozens

of employment,

audit and contract

les, among other

documents. Metras

management staff

released the les to

OIG investigatorswithout hesitation.

OIG investigators

conducted hundreds

of interviews with

Metra employees

at all levels of

management

and across nearly

all functions anddivisions within the

organization. In all

but a few instances,

employees were

willing to meet with

OIG investigators and

provide information to

assist in furthering our

investigations.


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STRATEgiC gUidANCE ON pROgRAm dEVELOpmENT

In 2010, Hillard Heintze authored, at the Boards request, a detailed and comprehensive report outliningour strategic recommendations on how to lay the proper long-term foundation vital to establishing a strong,

independent, sustainable and cost-eective function.

During June, July and early August, Hillard Heintze:

Identied other public transit organizations with an Inspector General function

Analyzed core Inspector General program development areas

Deliberated internally as a team on these ndings and insights as well as their strategic implicationsfor Metra and the organizations current objectives, resources and environment

Tis report was delivered to Metras Board on August 11, 2010 and published, by Board decision, on the Metra

website shortly thereafter. Briey, the report sets out a practical and achievable vision for the new Metra OIG,describes how other public transit organizations have established the function, and examines the most criticalbuilding blocks necessary to establish the Oce from mission and authority to stang, operations and funding.


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mETRA Oig: 2010 pUBLiCATiONS

LAUNChiNg ThE NEW mETRA OFFiCEOF iNSpECTOR gENERAL

Stratec Recoenatons on Establsn a Stron,ineenent an Sustanable Functon

Hillard Heintze published and presented a 103-page report

to Metras Board of Directors on August 11, 2010. The Board

released this publication to the public and posted it on the

Metra website.

In the report, Hillard Heintze outlined 15 strategicrecommendations on establishing an effective and efcientInspector General program. These recommendationswere crafted with the intent to help Metra (1) capture andimplement best practices in use today by other rail transportation OIG programs, (2) proceed ina nancially practical manner; and (3) increase the likelihood that the program would provide acontinuous stream of value to Metra over time.

In short, we recommended that beginning in 2010, Metra should:

1. Expand the existing authority for the OIG through an amended ordinance or statute.2. Institute a clear, direct and best-practice based reporting channel.3. Establish an appointment process that ensures independence.4. Finalize a complete job description for the new OIG position.5. Evaluate IG candidates by looking for signs of integrity, neutrality and experience.

6. Clarify the grounds on which the IG can be removed from ofce.7. Designate a funding source for the Metra IG function.8. Establish the right scope for the Metra IGs authority.9. Authorize the Metra IG to engage the services of external third parties.10. Extend to the Metra OIG the appropriate powers.11. Authorize the Metra IG to engage in eight specic activities.12. Establish an independent information technology function.13. Require strict conformity with professional standards.14. Set clear ethical guidelines.15. Require that the OIGs annual report include fact-based reporting on

the functions performance.

At the close of 2010, many of these recommendations have been authorized or are currentlyin effect. A few others are nearing completion. Still others have yet to be addressed. In 2011and beyond, as Metra and its stakeholders evolve their approach to positioning the OIGfunction for maximum impact at the most efcient cost, we recommend that each one of theserecommendations be implemented and sustained.

LAUNCHING THE NEW METRAOFFICE OF INSPECTOR GENERAL (OIG):

Our Strategic Recommendations on Establishinga Strong, Independent and Sustainable Function

August 11, 2010

Submitted to:

Chairman Carole R. Doris

Metra Board of Directors


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actons taken:nvestgaton of complantsand allegatons

Given the volume of complaints received since May 2010, one of the MetraOce of Inspector Generals leading priorities in addition to establishingthe rst-year cornerstones of the Oces activities was reviewing allcomplaints received and conducting investigations on those with merit.

As Inspectors General associated with any organization commonlyencounter, the validity of complaints received by the Metra OIG in 2010varied tremendously. Some were baseless on their face. Others involvedthe complainants dissatisfaction with labor-related issues already addressed

through arbitration or adjudication. Quite a few centered on minor eventsmany years in the past or were based not on fact, but on rumor or innuendo.

Of the 104 complaints received this year, we found that 78 meritedinvestigation. While these investigations addressed a variety of issues, mostconcentrated on one or several of the following areas: discipline, hiring andpromotion, nepotism, safety and procurement.

104Complaints Received

104Cases Opened

34 Cases Investigated -Closed with Findings/Recommendations

26 Cases Investigated -Complaint Not Substantiated

18 Cases Reviewed -Complaint Irrelevant to OIG Mission

15 Cases Referred to Metra Management -Issue Resolved

11 Cases Still Open as ofDecember 31, 2010

104 Total Cases Opened


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SpECiAL AREAS OF FOCUS

dsclneIn 2010, thirteen investigations

involved issues of inappropriateor excessive discipline or aperception of unfair treatment.

iNCONSiSTENCiES iN diSCipLiNE AppLiEdOur investigation conrmed that in multiple instances,the absence of common policies and protocols foremployee conduct and disciplinary actions led toconfusion among employees about what consequences

would result from specic behaviors. For example, oneemployee was terminated for excessive tardiness whileanother received only a minor suspension for a similarinfraction.

LENiENCy REiNSTATEmENTLeniency reinstatement is a practice used by Metra andmany other carriers in the rail transportation sector.

According to this practice, when a Metra employeeviolates a major policy rule, he or she can waive theirright to an investigation and hearing on their case. Inmany cases, Metra terminates employment, but soonrehires the individual and provides them with a position

within the organization on a probationary basis. Tis

frequent practice is often applied in an arbitrary mannerat managements discretion. For example, we determinedthat on several occasions employees had been terminatedfor committing serious acts (including criminal acts)and then rehired, pursuant to the leniency reinstatementpractice. Leniency reinstatement bypasses the arbitrationprocess and is decided solely by a discipline committeecomposed of senior Metra managers.

Our investigations revealed that Metras discipline processneeds revision. As outlined in the 2010 Metra OIG

Advisory Memorandum, Improving the Discipline and

Enforcement Process(Number 2010-2), we recommendthat Metra (1) direct management to create a best-practicebased discipline and enforcement policy; (2) mandatethe use of a discipline matrix to support progressivediscipline for policy non-compliance and dene egregiousviolations that trigger automatic termination; and (3) takepractical steps to help employees understand the policiesand rules and how discipline is enforced.

Number of In-Person Interviews with Complainants

82Number of Individuals Interviewed

275Number of Interviews**

541

Number of Complainants Interviewed*

96

13Cases Investigated/Reviewed by Metra OIG

- Resolved

75%

14%

11%

Cases Referredto Metra - Resolved

CasesOpenas of

12-31-10

* Eight (8) complainants were anonymous or refused interview

** Most complainants and many witnesses were interviewedmultiple times


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Neots

In 2010, eleven complaints related eitherdirectly or indirectly to the issue of nepotism.

Complainants alleged that some hiring at Metra has been basedupon familial relationships and that family members of Metraemployees are favored for new positions over those without a familymember working at the organization. Similar allegations were madeconcerning promotions at Metra, in that those with family membersin management positions are favored for promotions or careeradvancement over other Metra employees.

OIG investigators conrmed that there are and have been many Metra employees who are related to one another, which is

common among large organizations. Investigators did not uncoverany evidence of hiring or promotion based exclusively on familialrelationships. Te perception of nepotism, however, continues toundermine the Metra culture and work environment at many levels.

Information concerning this issue and recommendations werebrought to the attention of the Metra Board Chairman by the OIG.Subsequently, the Metra Board of Directors passed OrdinanceNo. ME 10-16 establishing a policy forbidding nepotism and arestriction against the creation of situations in which nepotism canoccur. Tis issue and related recommendations were also addressedin the 2010 Metra OIG Advisory Memorandum,Making Hiring andPromotion More Transparent(Number 2010-4).

11

A ShORT NOTEON ONgOiNgiNVESTigATiONS

The Metra Ofce of

Inspector General

enters 2011 with 11 open

investigations. Two are

investigations we are

pursuing cooperatively

with Blackman Kallick

on issues related to

overtime and contract

irregularities. One

complaint has led

to an evaluation ofsalary irregularities.

The remaining eight

focus on allegations

of procurement

irregularities, purchasing

kickbacks, inappropriate

hiring, intimidation and

workplace violence.

Most, if not all,

of these investigations

will be concluded earlyin 2011.

Orn of Oig Colants

Email

46 38 15

OIG Hotline From Metra IG Initiated

5


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Safet

In 2010, ve complaints involved safety.All were referred to Metra management

which took appropriate action.

Most of the referrals did not center on issues that signicantlyimpacted the employees of Metra or the operation of thetrains. Several complaints received by the OIG did not fall

within the OIG mandate, yet required management action.Tese cases were referred to Metra management for a response.Te referrals were monitored by the OIG to determine if theactions taken by Metra management were appropriate and inalignment with Metra policies.

wo complaints, however, involved safety. In the rst case,

an employee reported that water leaks in a yardmasters oceresulted in standing water in the building, the developmentof mold and, through this contamination, an unsafe workenvironment. Te issue had allegedly been reported to Metramanagement by employees to no avail. Upon receiving thecomplaint, the OIG advised Metra management of the issueand requested action and a response. Metra managementimmediately acted upon the complaint and resolved the issuesatisfactorily within four days.

Te second case involved two employees reported to beunder the inuence of narcotics. Working with the OIG,Metra management acted quickly, observed the employeesabnormal behavior and immediately suspended them. When asubsequent drug test conrmed the employees were under theinuence of narcotics, their employment was terminated.

5

Safety 5Customer Service 2

Station FacilityManagement 2

Payroll/PensionIrregularities 2

Human Resources 2

Contractor Payment 1

Employee Conduct 1

Total Cases Referredto Metra Management 15

Note: Referred cases were management issues thadid not fall within the scope of the OIG mandate

Cases Referred toMetra Management -

Resolved


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2010 Conuct Alleatons most Freuentl Reorte

Unfair Discipline 13

Disparate Compensation 11

Procurement 11

Management Misconduct 10

Improper Hiring 10

Promotion Irregularities 9

Disparate Compensation - Pension 5

Improper Termination 5

Safety 5

Contract Irregularities 4

Purchasing Violations 4

Human Resources 2

Workplace Violence 1

Irrelevant to IG Mission 18


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procureent

The Metra OIG received 11 complaints regarding irregularities in theprocurement process. These related, in general, to the following areas:

Bid SOLiCiTATiON ANd CONTRACT AWARd pROCESSTe OIG received several allegations or complaints concerning questionable contractual agreements betweenMetra and several outside companies. Te complaints were credible and provided sucient information to

warrant a review of a number of contractual agreements and an analysis of the processes through which thevendors were selected. For example, it was alleged that the manner in which Metra selected vendors for aspecic area was fraught with favoritism, bias and deceptive practices. OIG investigators examined the processthrough which bids were solicited and received, as well as conducted many interviews with Metra managers

who were involved in the screening and selection process. Although the initial a llegations contained enoughcredible information to trigger an OIG investigation, investigators uncovered no evidence of undue inuence anddetermined that the process was fair, open and impartial.

diSAdVANTAgEd BUSiNESS ENTERpRiSES (dBEs)An OIG investigation was initiated pursuant to an allegation that federal funding for Disadvantaged BusinessEnterprises had not been awarded fairly by the Metra DBE Department and that favoritism and ethnicity play asignicant role in funding for contracts.

Our investigators found no wrongdoing with respect to funding or contracts steered to favored ethnicities byanyone in the DBE Department. OIG investigators determined that businesses owned by African Americans areawarded contracts at a lower level than their percentage in the Metra DBE Certication Program Directory wouldsuggest due to the low number of African American contractors that submit bids for large monetary contracts.

Te OIG team also determined that Subcontinent Asian Americans participate at a higher level than theirpercentage in the Metra DBE Certication Program Directory and that statistically, Hispanic-owned businessesreceive a signicantly larger share of federal funding than businesses owned by African Americans and at anumber higher than their participation level in the program.

It appears that DBE contracts are awarded based on availability of vendors in specic trades, on various types ofconstruction projects and on the relationships and history between the prime contractors and the subcontractors.Te bidding process was found to be compliant with rules for federal funding and bids were posted openly,indicating fair and impartial processes without undue inuence.

REAL ESTATE TRANSACTiONS

An OIG investigation was also initiated pursuant to allegations that Metra employees proted from real estatetransactions for land in which Metra may have had either a current or future interest. OIG investigatorsconducted interviews and examined the deeds, titles, plat of surveys and other documents related to the landacquisition. Metra may, in fact, have a future interest in the land in question for the construction of a new stationor other facility. Tis complaint, however, was determined to be unfounded as no evidence was discovered thatMetra employees proted or stand to prot from future transactions should Metra purchase the property.

Te Metra OIG will continue to investigate procurement in other departments. Te investigations will beintensive and time consuming, but necessary to ensure fairness, impartiality and transparency in the process.

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At hllar hentze,

we see te Ofce ofinsector general

as an neenent

an crtcal functon

tat las a unue

role n fostern

ublc ntert

an elnatn

waste, frau an

abuse wtn a

lare, colex

oranzaton.

key challenges n 2011

Continuing to establish the foundations for a best-practice based Metra OIGprogram is essential to Metras vitality and performance in the years ahead for every stakeholder vested in its success.

When Hillard Heintze accepted responsibility as Metra Inspector General in Mayof this year, the Hillard Heintze team stepped into the assignment without priorknowledge, preconceptions or judgments about Metras eectiveness or eciencyin carrying out its mission to the public. As the years work came to a close aftermore than 500 interviews with individuals working across Metras various operations

and examinations of thousands of pages from hundreds of les and documents aclearer picture of Metra is emerging.

It is apparent that Metra like most large, complex organizations is not withoutchallenges, but we nd the agency demonstrates a well-honed ability to carry out itsservice commitments. Tis ability, however, stands side-by-side with vulnerabilitiesthat range from strategic to tactical vulnerabilities that will continue to undermineMetras performance unless the OIG function is rmly, visibly and permanentlymaintained in place.

At Hillard Heintze, we see the Oce of Inspector General as an independent andcritical function that plays a unique role in fostering public integrity and eliminating

waste, fraud and abuse within a large, complex organization.

Bringing this perspective to Metra, and systematically translating it into measurable,mission-aligned value, will require a sustained focus. It will also require time.

While the inaugural program-building OIG activities completed in 2010 representa strong step in the right direction, continuing this success and momentum in 2011and beyond will require a proactive and energetic approach to three challenges.Tese include: (1) expanding the focus of OIG resources beyond investigations toaudits, inspections and evaluations; (2) continually championing the importance ofethics, integrity and fairness; and (3) establishing a strong, long-term foundation forthe OIG program that is both eective at meeting the OIG mandate and also highlycost eective, given Metras nancial objectives and constraints.


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EpANdiNg ThE FOCUS TO AUdiTS, iNSpECTiONS ANd EVALUATiONS

Now that the initial wave of complaints has been largely addressed, we anticipate the volume of complaints andallegations will stabilize in 2011 and perhaps even decline. Tis will al low the OIG to shift more resources from

complaint review and investigation to other mandated requirements.

In 2011, the OIG should begin conducting independent audits of business assets or practices related to areassuch as nancial reporting, accounting, human relations, information technology, information security, costmanagement, pricing, sales strategies and compliance with contractual requirements and with federal, state andlocal regulations. Among these, special attention should be paid to Metras internal controls, nancial reportingand information security.

In addition to these audits, inspections and evaluations should be undertaken proactively particularly reviewsof adherence to agency-wide policies, safety procedures and procurement rules. Conducting such inspections inconjunction with other internal functions and units such as the Equal Employment Opportunity Oce, theDepartment of Human Resources and the Oce of Labor Relations will help the OIG fulll its advisory role

within the agency to improve management accountability and practices.

ChAmpiONiNg ThE impORTANCE OF EThiCS, iNTEgRiTy ANd FAiRNESS

One of the most critical roles of the Inspector General function in any organization is to maintain anunwavering spotlight on how ethics, integrity and fairness are advanced and reected in the organizationsday-to-day activities. While every Metra employee, department and management committee carries the sameresponsibility to keep these principles at the heart of the agencys operations and activities, the Metra OIGsduty is to carry the ag in three very dierent ways:

Acton: Te rst and most obvious manner is through the direct execution of its duties in investigatingallegations of fraud, waste, abuse, mismanagement, misconduct, nonfeasance, misfeasance and malfeasancewith respect to Metra.

presence: Te second way, though more subtle, is enormously important. As employees, sta, suppliers andother stakeholders increase their awareness of the Metra OIGs role and begin to see changes whether small orlarge in various policies and practices across the organization, a number of positive outcomes begin to emerge.Over time, transparency increases and behaviors change. Eciencies grow, morale improves and rumorsdecline. As these changes are institutionalized, sustaining a renewed culture of ethics, integrity and fairnessbecomes important not just to the Metra Board and management team, but also to individual employees whoincreasingly identify their future as closely aligned with the reputation and practices of the organization.

Leaers: Distinct from its investigative responsibilities and, by extension, the outcomes these actions fosteris the OIGs proactive role in serving as Metras unocial Chief Integrity Ocer in eect, as the mentor andchampion of fair and ethical actions and decisions at every level of the agency.

As with other challenges confronting Metra and the Metra OIG in 2011, refreshing and renewing a culture ofethics, integrity and fairness is not an objective that can be achieved in a year or two. Essential to this goal,as well as others, is ensuring that the OIG is established in some form as a permanent function at Metra in asustainable way.


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BUiLdiNg A LONg-TERm pROgRAm ThAT iS EFFECTiVE ANd EFFiCiENT

As of December 31, 2010, the Metra Board has been unable to move forward with a permanent solutionfor structuring the Oce of Inspector General due to several factors, including a lack of political consensusand legislation pending in the Illinois General Assembly. Current bills in the Assembly call for a variety ofstructures. Tese structures vary with respect to their implications on the most critical program elements, suchas independence, scope of authority and reporting channels.

In our report to the Metra Board, Launching the New Metra Oce of Inspector General, we outlined several viableoptions for establishing a long-term foundation for the Oce. We see three strategic options confronting theMetra Board. Tese options are presented in detail on the pages that follow.


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opton 1: fund and establsh a full-scale, n-house functon

This is the most common approach among government agencies. If the foundingauthority for the OIG chose to pursue this option, it would systematically create aself-sufcient, independent, fully-staffed professional ofce dedicated to fullling thenew Metra OIG mission.

AdVANTAgES

Ensures an IG function deeply

committed to Metras mission,purpose and operations.

Demonstrates organizationalstability and is best suited to setlong-term reform goals.

diSAdVANTAgES

High cost of employing personnel

from hiring, onboarding andsupervision to mentoring, trainingand professional development.

Longer lead time required toestablish and cultivate a fully mature,high-performing ofce.

Estate Frstyear Cost Rane: From $1.2 million to $1.5 million


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AdVANTAgES

Provides Metra with on-demand

access to a broader pool ofmore experienced specialists andsubject-matter experts in a widerset of OIG-related domains.

Results in lower cost forthis expertise.

Offers Metra the immediatebenets of a fully matureOIG function.

diSAdVANTAgES

Typically, the external service

provider may be perceived byinternal and external stakeholdersas not having the same connectionand dedication to the agency thatan in-house OIG may have.

Estate Frstyear Cost Rane: From $500,000 to $700,000

opton 2: outsource the entre functon

This option involves fully outsourcing Metras OIG to a third party such as anIndependent Private Sector Inspector General (IPSIG) or other IG services rm. In thismodel, the external rm reports to the individual or body designated by the foundingauthority and conducts all IG activities and functions.


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opton 3: cra a hybrd soluton

This model combines aspects of an in-house OIG with those of an external provider.Metra would employ an in-house Metra Inspector General. The new Metra IG wouldbe supported by an external IG services rm that conducts operational functions atthe direction and oversight of the Metra IG.

AdVANTAgES

Allows Metra to quickly establish a

fully functioning IG capability.

Lowers Metra costs by accessinga wider portfolio of expertise andskill sets on an as-needed basis.

Ensures greater independence byhaving a third party conduct coreOIG operations.

Provides the Metra Board withassurance that the mission and

needs of the agency remain aprimary focus.

diSAdVANTAgES

As with option 2, the external IG

services rm is not solely focusedon one entity. The risks associatedwith this, however, are mitigatedby having a full-time IG supervisingthe external service providerspriorities, activities and overallperformance on a constant basis.

Estate Frstyear Cost Rane: From $700,000 to $900,000

Based on the knowledge, insights and hands-on experience Hillard Heintze has gained overthe year as Metras Interim Inspector General, we rmly believe that the third option ahybrid solution would best advance Metras interests in terms of both effectiveness andefciency in 2011 and beyond.



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iNTERim mETRA OFFiCE OF iNSpECTOR gENERAL

Summary of 2010 Funding

2010

Initial funding (May 26, 2010) $ 100,000

Change Order No. 1 (July 9, 2010) $ 100,000

Change Order No. 2 (September 17, 2010) $ 500,000

Total metra Oig 2010 Funn $ 700,000

Total metra Oig 2010 Actual Costs $ 688,411

CarrForwar Funn to 2011 $ 11,589

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iNTERim mETRA OFFiCE OF iNSpECTOR gENERAL

Budget Projections for 2011 and 2012Based on Option 3

2011 2012

Strategic Guidance on Program Development $ 50,000 $ 50,000

Investigations $ 260,000 $ 230,000

Audits $ 175,000 $ 210,000

Inspections and Evaluations $ 100,000 $ 130,000

Outreach and Education $ 90,000 $ 90,000

Full Time Metra Inspector General (6 months 2011) $ 75,000* $ 150,000*

OIG Administrative Assistant (6 months 2011) $ 20,000 $40,000

Total $ 770,000 $ 900,000

Funn Arove to date (Cane Orer No. 3, 12/20/2010) $ 200,000

CarrOver Funn to 2011 $ 11,589

Funn to be Arove $ 558,411

* Based on review of industry norms which indicate a salary range between $120,000 and $150,000,

depending on qualications

nterm metra oce of nspector generalnancal nformaton



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appendx a

mETRA COmmUTER RAiL BOARd ORdiNANCE NUmBER 10-4

WHEREAS, the Board of Directors (Board) of the Commuter Rail Division of the Regionalransportation Authority (Metra) is committed to honest and ecient operation of commuter rail services;

WHEREAS, the Board believes that the establishment of an Oce of Inspector General substantially furthersthese goals;

NOW, HEREFORE, BE I ORDAINED BY HE BOARD AS FOLLOWS:

1. Te Board hereby creates the Oce of Inspector General (OIG).

2. Te OIGs jurisdiction and duties shall be as follows.

2.1. Te OIG shall have jurisdiction over Metra (which includes its operating corporation, the NortheastIllinois Regional Commuter Railroad Corporation) and all Board members, ocers, employees of,contractors, subcontractors, suppliers, and others doing business with, Metra.

2.2. Te OIG shall investigate allegations of fraud, waste, abuse, mismanagement, misconduct,nonfeasance, misfeasance, or malfeasance with respect to Metra.

2.3. Investigations may be based on complaints from any source, including anonymous sources, and may beself-initiated, without a complaint.

3. Te OIGs investigation results shall be handled as follows.

3.1. If the OIG, upon the conclusion of an investigation, determines that reasonable cause exists to believethat fraud, waste, abuse, mismanagement, misconduct, nonfeasance, misfeasance, or malfeasance hasoccurred, the OIG shall issue a summary report of the investigation to the Board.

3.2. If the OIG, upon the conclusion of an investigation, determines that it is appropriate and warranted torefer an investigation to a federal, state or local law enforcement agency, then the OIG shall make suchreferral and provide a copy of the summary report to the appropriate agency.

3.3. If the OIG, upon conclusion of an investigation, determines that there is insucient evidence thatfraud, waste, abuse, mismanagement, misconduct, nonfeasance, misfeasance, or malfeasance hasoccurred, the OIG shall close the investigation.

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4. Te OIG shall: have access to all information and personnel necessary to perform the duties of the oce;request any information or assistance that may be necessary for carrying out the duties and responsibilitiesprovided by this Ordinance from any local, state, or federal governmental agency or unit thereof; establisha policy that ensures the appropriate handling and correct recording of all investigations conducted by theOce, and ensures that the policy is accessible in order that those seeking to report suspected wrongdoingare familiar with the process and that the subjects of those allegations are treated fairly; receive andinvestigate complaints or information concerning the possible existence of an activity constituting a violationof law, rules or regulations, mismanagement, abuse of authority, or substantial and specic danger to thepublic health and safety; and review, coordinate, and recommend methods and procedures to increase theintegrity of Metra.

5. Any employee of Metra who knowingly les a false complaint or les a complaint with reckless disregard forthe truth or falsity of the facts underlying the complaint may be subject to discipline.

6. All Board members, ocers and employees of Metra have a duty to cooperate with the OIG in anyinvestigation undertaken pursuant to this Ordinance. Failure to cooperate includes, but is not limited to,

intentional omissions and knowing false statements. Failure to cooperate with an investigation pursuant tothis Section is grounds for disciplinary action, including termination of employment. However, nothing inthis Ordinance purports to limit or alter a persons existing rights or protections under State or federal law orany collective bargaining agreement.

7. Te OIG shall prepare an annual written report to the Board, outlining the activities of the OIG for thepreceding year. Te OIG shall also make interim reports to the Board, as it deems necessary or as requestedby the Board.

8. Upon passage and approval of this Ordinance, the Board shall designate a rm or individual (InterimInspector General) to sta and lead the OIG on an interim basis. Te compensation of the InterimInspector General shall be determined by the Board. Te Interim Inspector General shall exercise and

have the jurisdiction, duties, rights and responsibilities of the OIG until such time, if any, as a permanentInspector General is designated. Te Interim Inspector General shall also recommend to the Board a budgetand any necessary rules that are required for the eective operation of the OIG.

9. Te Chairman of the Board is hereby authorized to take such actions as necessary to implementthis Ordinance.

May 26, 2010


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appendx b

mETRA Oig AdViSORy mEmORANdUmS

Metra OIG Advisory Memorandum No. 2010-1 - Dening a Clear, Actionable and Long-erm Strategic Plan

Metra OIG Advisory Memorandum No. 2010-2 - Improving the Discipline and Enforcement Process

Metra OIG Advisory Memorandum No. 2010-3 - Reinforcing the Importance of Ethics And Integrity

Metra OIG Advisory Memorandum No. 2010-4 - Making Hiring and Promotion More ransparent


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Defining a Clear, ActionableAnd Long-Term Strategic Plan

The Critical Need to Clarify Metras Mission, Vision and Values, Set Strategic Objectives,and Define the Path the Organization Must Follow to Achieve Them

September 29, 2010

A METRA OIG ADVISORY MEMORANDUMNo. 2010-1


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ADVISORY MEMORANDUM No. 2010-1Defining a Clear, Actionable and Long-Term Strategic Plan

HILLARD HEINTZE The Metra Office of Inspector General 1

TO: Chairman Carole Doris and the Metra Board of DirectorsFROM: Arnette Heintze, Hillard HeintzeDATE: September 29, 2010

RE: Defining a Clear, Actionable and Long-Term Strategic Plan

I. Strategic Issue and Context

Shining a bright light on the path ahead isnt just important. Its mission critical especiallyfor Metra at this point in its evolution. As you know, the Metra OIG team at HillardHeintze is systematically (1) investigating allegations, (2) making determinations onreasonable cause and (3) referring case files, if necessary, to you and the Board or toappropriate law enforcement authorities.

As we are doing so, however and as we shift from a crisis footing to a moreproactive, forward-facing posture we are on alert for strategic opportunities to improvethe integrity of Metras operations and performance. Were looking, for example, for rootcauses, for commonalities across signs of fraud and symptoms of inefficiency, and forsignificant windows of opportunities to build trust among Metras stakeholders and toadvance the effectiveness and efficiency of the organization as a whole.

At this point after 125 days of concentrated activities and after initiating investigations ofmore than 85 allegations we find that one of the most critical deficits is the absence ofan overall agency-wide strategic plan. While some Metra departments have produced

various components of a plan (and many take a strategy-driven approach to decision-making), the lack of a strategic plan at the enterprise level makes it almost impossible toguide the organization and all 2,850 employees in a common direction and align theactivities of every single division, department, and individual with Metras strategicobjectives.

II. Implications for Metra

Metras identity, objectives and strategy should not be left for others to define. Inthe absence of a clear roadmap, its much easier for others to misinterpret theorganizations trajectory, the rationale and logic that drive its major decisions, andthe Metra leaderships ability at the board and management level to marshalinternal resources, manage complexity and lead the agency in a positive, plannedand promising direction.

Clarifying this path is particularly critical right now. As a Board, you are in theprocess of making quite a number of changes at this point and may very wellincrease the pace, intensity and ultimate impact of your direction to managementin the months and quarters ahead. A strategic plan and its key elements from

vision and values to priorities and objectives would provide an indispensableframework for almost every decision you will make and nearly every stakeholdergroup you will either directly or indirectly ask to support the overall success of

your plans.


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ADVISORY MEMORANDUM No. 2010-1Defining a Clear, Actionable and Long-Term Strategic Plan


III. Our Recommendations

1. Identify an executive champion for the strategy initiative. Select a senior executivewho will act as a leader, mentor and champion for a Metra strategic planninginitiative. Ask this individual to play a bold and ongoing leadership role intransforming Metra into an organization that embraces a strategy-driven approachto decision-making and thinking at every level of the enterprise.

2. Establish a Strategic Planning Steering Committee. Ensure that the Committee iscomposed of representatives from all areas of Metras operations as well as from

various levels of the organization.

3. Direct the Strategic Planning Steering Committee to: First develop Vision, Mission and Values statements and then agency-wide

objectives.

Define a strategic framework for the planning process. Ensure that theprocess results in a plan that supports the coordination of priorities andobjectives across individuals, work groups, departments and key operatingdivisions.

Align the organization behind this plan and its success. Re-position Metrasperformance measurement, compensation and recognition systems tomeasure and reward personnel based on their accomplishment of the goalsoutlined in the strategic plan.

Ab ou t Th is Pu bl ic at io n: This Metra OIG Advisory Memorandum is part of a regular and ongoingseries of briefings and recommendations prepared by Hillard Heintze, as the Metra Office of InspectorGeneral, and presented to the Metra Board of Directors on a wide range of issues, strategies andopportunities vital to advancing the integrity of Metras performance and operations.

Key Take-Away

Your plan isnt just a roadmap.Its also a common language.

The clearer the path ahead, the more likely stakeholders from employees to thegeneral public will be to (1) understand the Board and Managements reforms andchanges in a broader strategic context, (2) view their individual professional goals inlight of the objectives of their group or their department, and (3) see their ownsuccess and Metras as the same.


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Improving the Discipline andEnforcement Process

The Importance of Bringing a More Consistent Approach to How Policies and RegulationsAre Defined, Applied and Enforced Across the Metra Organization

September 29, 2010



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ADVISORY MEMORANDUM No. 2010-2Improving the Discipline and Enforcement Process



1. Direct management to create a best practice-based discipline and enforcementpolicy. Insist that it be designed to guide employee misconduct investigationsacross their full lifecycle from complaint intake and investigation to enforcement,appeal and reinstatement. Ensure the policy mandates training for supervisors forcommon violations as well as those of a sensitive nature and acknowledges thefact that some investigations require a specialized approach that supervisorscannot be expected to understand and follow. Also discontinue the overly broaduse of the leniency reinstatement policy as a mechanism for discipline. Instead,use it only as an opportunity for an employee to seek review and leniency andthen base its application on the merits of the case.

2. Mandate the use of a discipline matrix. The matrix (Figure 1) should supportprogressive discipline for policy non-compliance but also define egregiousviolations that trigger automatic termination. These include, for example, acts ofviolence, illegal drug or alcohol use on duty, wanton disregard of safety rules,theft, destruction of Metra property and falsifying documents.

3. Take practical steps to help employees understand both what the policies and rulesare and how discipline and enforcement are enacted. As this awareness increases,the number of employee misconduct investigations and the frequency ofdisciplinary actions will decline. These improvements, in turn, will loweradministrative burdens, improve employee morale and generate financial savingsassociated with the costs of terminating employees and replacing them with newlyhired personnel.

Figure 1: Use of a discipline matrix like the one below is a best practice for large organizations.

First Offense Second Offense Third Offense Fourth Offense Fifth Offense Sixth Offense Seventh Offense

Level 1Reprimand to3 Days

1 to 5 Days 3 to 10 Days 7 to 14 Days 15 to 45 Days 30 to 90 Days90 Days toTermination

Level 2 3 to 10 Days 7 to 14 Days 15 to 45 Days 30 to 90 Days60 to 180Days

90 Days toTermination

Level 3 7 to 14 Days 15 to 45 Days 30 to 90 Days 60 to 180 Days90 Days toTermination

Level 4 15 to 45 Days 30 to 90 Days 60 to 180 Days90 Days toTermination

Level 5 30 to 90 Days 60 to 180 Days90 Days toTermination

Level 6 60 to 180 Days90 Days toTermination

= Non-Adverse Actions

Level 790 Days toTermination

= Adverse Actions

NOTE: This table refers to the federal government distinction between two types of behavior that triggerdifferent threshold levels of investigations. Non-adverse actions include suspensions of 14 days or less,letters of reprimand and verbal reprimands. Adverse actions include suspensions of greater than 14 days,demotions and termination.

Ab ou t Th is Pu bl ic at io n: This Metra OIG Advisory Memorandum is part of a regular and ongoing series ofbriefings and recommendations prepared by Hillard Heintze, as the Metra Office of Inspector General, and

presented to the Metra Board of Directors on a wide range of issues, strategies and opportunities vital toadvancing the integrity of Metras performance and operations.


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Reinforcing the Importanceof Ethics and Integrity

Key Strategies Metra Leadership Can Take to Begin RebuildingTrust Among Employees, the General Public and Other Stakeholders

October 29, 2010



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ADVISORY MEMORANDUM No. 2010-3Reinforcing the Importance of Ethics and Integrity


TO: Chairman Carole Doris and the Metra Board of DirectorsFROM: Arnette Heintze, Hillard Heintze

DATE: October 29, 2010

RE: Reinforcing the Importance of Ethics and Integrity


Perceptions matter. Today both internal and external perceptions of Metra are major obstacles tothe organizations transformation. Among the most common and recurring threads across theinvestigation-related interviews the Hillard Heintze team is conducting is an abiding perceptionamong a significant number of Metra employees that Metra management is a good old boysclub and that decisions from small to strategic are routinely made without regard for ethics,

integrity and fairness. At the same time, since the Pagano matter, some segments of the generalpublic the Metra organization operates in a patronage-driven, politics as usual environment.

It will be significantly more difficult if not impossible to enact the extensive improvements theBoard desires at Metra without changing these beliefs and their corrosive effect on employeebehavior and the publics expectations. While addressing individual acts of malfeasance can beeffectively managed through mechanisms such as background screening and a transparentdisciplinary system, high tolerance levels for misbehavior and mismanagement that areinstitutionalized are much harder to identify, more difficult to correct and exponentially moredangerous to the agency.

II. Reinforcing Ethics and Integrity CanBring a Virtuous Cycle of Benefits

Acknowledging that ethics and integrity needattention will take strong leadership. Statementshighlighting past actions to address these issues

will be perceived as defensive in nature andout of touch with the long-standingconcerns of employees, the public and thebody politic.

Choose instead to be a champion of thisissue. Emphasize that the right actions andappropriate behaviors on the part of manycurrent Metra managers and employees willbe overshadowed until a renewed platformof ethics and integrity is firmly established.Then take immediate action to do so. If youare consistent, compelling and committed in thiseffort, you will trigger a virtuous cycle that will

yield benefits to the organization for years to come.

Employees takenote of newprograms andhigh-profile cases

Acts of dishonesty(overt, repetitive,egregious)decline

Employees raiseexpectations ofthemselves and

one another

A new culture ofethics and

integrity take root

Board andmanagement

champion ethicsand integrity


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ADVISORY MEMORANDUM No. 2010-3Reinforcing the Importance of Ethics and Integrity



1. Form a Metra Ethics and Integrity Committee. Make sure that it is not only trulyrepresentative of both management and employees but also perceived as such. Considermaking membership total from 15 to 20 people.

2. Charge it with developing a Statement of Values and Ethics and a Code ofConduct. The former should define the values and principles that the Metra organizationaspires to embody. The latter codifies the responsibilities and restrictions necessary tosupport these and outlines a comprehensive set of policies that guide ethical behavioracross Metras various operations and divisions.

3. Next, have the committee develop a concrete and practical plan to communicateand embed awareness of these ethics and policies throughout the organization.The plan should consider and coordinate a wide range of effective strategies such as

mounting awareness building campaigns, mandating ethics training, establishing aprogram that identifies and rewards ethical behavior in the workplace, and ensuringproper reporting mechanisms and protections for whistle-blowers.

About This Publication: This Metra OIG Advisory Memorandum is part of a regular and ongoing series ofbriefings and recommendations prepared by Hillard Heintze, as the Metra Office of Inspector General, and

presented to the Metra Board of Directors on a wide range of issues, strategies and opportunities vital toadvancing the integrity of Metras performance and operations.


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Making Hiring and PromotionMore Transparent

The Need to Develop Employment and Advancement ProcessesThat Are Open, Clear and Consistently Applied

October 29, 2010



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ADVISORY MEMORANDUM No. 2010-4Making Hiring and Promotion More Transparent


TO: Chairman Carole Doris and the Metra Board of DirectorsFROM: Arnette Heintze, Hillard Heintze

DATE: October 29, 2010

RE: Making Hiring and Promotion More Transparent


Few issues are more important to employees than opportunities to advance or change theirposition, job responsibilities and pay. Yet when the evaluation and decision-making processessupporting hiring, promotion, salary increases and termination are not fully transparent andunderstood, even actions that adhere to policy can be perceived accurately or inaccurately asdriven by favoritism, discrimination or another form of misguided intent. A great number of the

Metra OIG investigations relate to this area. While some of these havefactual merit, othersinvolveperceptionsof inappropriate managerial decisions in these areas. We regard both fordifferent reasons as equally damaging to Metras current and future vitality.

II. Three Specific Examples

Common Observation: Metra employees are con

hillard heintze report

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