t-5c il Exhibit Eli-I 0-02 RESOLUTION TO ACCEPT AND APPROVE THE QUARTERLY INVESTMENT REPORT

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1 Exhibit Eli-I 0-02 RESOLUTION TO ACCEPT AND APPROVE THE QUARTERLY INVESTMENT REPORT WHEREAS, the Quarterly Investment Report for the quarter ended September 30, 2011 is hereby submitted in accordance with the Public Funds Investment Act; WHEREAS, the Executive Board has reviewed the document and finds it to be in compliance with the Act; NOW, THEREFORE, BE IT HEREBY RESOLVED: Section 1: The Executive Board hereby accepts the Quarterly Investment Report for the quarter ended September 30, Section 2: This resolution shall be in effect immediately upon its adoption. t-5c il y Linda4(od, Councilmember, City of Dallas 4 resident I I hereby certify that this resolution was adopted by the Executive Board of the North Central Texas Council of Governments on October 27, Stephen Terrell, Secretary-Treasurer Mayor, City of Allen

2 Exhibit Eli-I 0-03 RESOLUTION AUTHORIZING FACILITIES MANAGEMENT AGREEMENT WITH XEROX BUSINESS SERVICES WHEREAS, NCTCOG contracts with Xerox Business Services (XBS) to operate its Print Shop and mailroom functions; and WHEREAS, the current agreement will expire December 1, 2011; and and WHEREAS, NCTCOG staff considered the services and equipment of other vendors; WHEREAS, all competitive bidding requirements according to Local Government Code, Chapter are satisfied through XBS participation in The Cooperative Purchasing Network (TCPN); and WHEREAS, benefits of a new lease with XBS will provide NCTCOG with updated digital multi-functional equipment providing more staff efficiency and a decrease in operating cost; and WHEREAS, the monthly base cost for this service would be $13,029 for NCTCOG and $4,362 for the Workforce Centers -- period and; totaling $1,043,515 (excluding overages) for the five-year WHEREAS, NCTCOG will realize over $134,000 in cost savings over the 5-year period for NCTCOG and the Workforce Centers. NOW, THEREFORE, BE IT HEREBY RESOLVED: Section 1. That the Executive Board authorizes the Executive Director to sign a five-year lease contract with Xerox Business Services effective December 1,2011 through November 30, 2016 at a total contract price of $1,043,515 (excluding overages). Section 2. That additional equipment may be added throughout the contract. Section 3. That this Resolution shall be in effect immediately upon its adoption. Linda Koo President Councilmember, City of Dallas I hereby certify that this resolution was adopted by the Executive Board of the North Central Texas Council of Governments on October 27, / / / Stephen Terrell, Secretary-Treasurer Mayor, City of Allen

3 Exhibit E11-1O-05 RESOLUTION AUTHORIZING THE PURCHASE OF TECHNICAL SERVICES FROM INX INCORPORATED AND FLAIR DATA SYSTEMS WHEREAS, the Executive Board is the governing body of the North Central Council of Governments (NCTCOG); and WHEREAS, service delivery is enhanced through the use of appropriate technology; and WHEREAS, the has complied with federal and state regulations regarding contracting and procurement. NOW, THEREFORE, BE IT HEREBY RESOLVED: Section 1: The NCTCOG Executive Board approves the FY purchase of technical services from INX Incorporated and Flair Data Systems on an as needed basis in an amount not to exceed $400,000. Section 2: That this resolution shall be in effect immediately upon its adoption. ip, President Councilmember, City of Dallas I hereby certify that this resolution was adopted by the Executive Board of the North Central Texas Council of Governments on October 27, LL L Steph n Terrell, Secretary-Treasurer Mayor, City of Allen

4 Exhibit Eli-I 0-06 RESOLUTION AUTHORIZING FY2O11-12 PURCHASE OF COMPUTER HARDWAREAND SOFTWARE FOR THE AGENCY WHEREAS, the Executive Board is the governing body of the North Central Council of Governments (NCTCOG); and WHEREAS, the Executive Board has approved the FYI 1-12 purchase of Computer Hardware and Software; and WHEREAS, the has complied with federal and state regulations regarding contracting and procurement. NOW, THEREFORE, BE IT HEREBY RESOLVED: Section 1: The NCTCOG Executive Board approves the FY purchase of Computer Hardware and Software for an amount of $2,241, Section 2: That this resolution shall be in effect immediately upon its adoption. Councilmember, City of Dallas I hereby certify that this resolution was adopted by the Executive Board of the North Central Texas Council of Governments on October 27, Mayor, City of Allen

5 Exhibit Eli-I 0-07 RESOLUTION ACCEPTING AUDIT REPORT FROM WEAVER TEXAS DEPARTMENT OF TRANSPORTATION (TXDOT) AGREED-UPON PROCEDURES & AUDIT TIDWELL, LLP, FOR THE WHEREAS, the North Central Texas Council of Governments (NCTCOG) is authorized by law to conduct such coordinating and technical activities as may be required to guide the unified development of through areawide planning; and, the area, eliminate duplication, and promote economy and efficiency WHEREAS, the Unified Planning Work Program (UPWP) provides that consultant assistance may be requested to perform planning and implementation projects and, procedures in the UPWP; WHEREAS, NCTCOG s Transportation Department utilizes contracting procurement in the selection and contracting with consultant to perform these activities; and, WHEREAS, NCTCOG s Transportation Department s contracting procurement procedures have been approved by TxDOT; and, WHEREAS, NCTCOG s Transportation Department s contracting procurement any consultant contract procedures requires an external audit WHEREAS, the accounting of firm of Weaver & Tidwell, in LLP, in Transportation Department s consultant and subgrantee contracts Fiscal Year and, contracts: (FY) excess of $250,000; and, performed an audit $250,000 for excess 2010, to determine compliance with the department s contracting procedures; WHEREAS, the audit consisted 1) seven contracts required to be reviewed and of a financial and non-financial review of a total 2) of of the of 14 seven contracts selected through a random sample out of 46 contracts that the department desired to be reviewed, although not required under the contracting procedure; and, existed for any WHEREAS, Weaver of & Tidwell, the contracts reviewed. LLP, prepared a final report finding that no exceptions NOW, THEREFORE, BE IT HEREBY RESOLVED THAT: Section 1. The Agreed-Upon Procedures Audit Report, included as Attachment prepared by Weaver & Tidwell, LLP, consultant and subgrantee contracts be hereby accepted. on Transportation Department in excess of $250,000 for FY 1, 2010,

6 Section 2. Section 3. The report shall be transmitted to TxDOT and other funding agencies as appropriate. This resolution shall be in effect immediately upon its adoption. p, president Councilmember, City of Dallas I hereby certify that this resolution was adopted by the Executive Board of the North Central Texas Council of Governments on October 27, Steph n Terrell, Secretary-Treasurer Mayor, City of Allen

7 ATTACHMENT 1 NORTH CENTRAL TEXAS COUNCIL OF GOVERNMENTS AGREED UPON PROCEDURES SEPTEMBER 30, 2010

8 weaver> INDEPENDENT ACCOUNTANT S REPORT ON APPLYING AGREED-UPON PROCEDURES Mr. Monte Mercer Deputy Executive Director Arlington, Texas We have performed the procedures listed below, which were agreed to by North Central Texas Council of Governments (the Council), solely to assist the Council in verifying the invoices related to the Transportation consultant contracts listed in Schedule B to our engagement letter dated May 18, 2011, are in compliance with the procedures listed in the attached Schedule A. The Council s management is responsible for the Council s compliance with those procedures. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those specified parties in this report. Consequently, we make no representation regarding the sufficiency of the procedures described in the attached document either for the purpose for which this report has been requested or for any other purpose. SAMPLING METHOD The Council provided a list of contracts that were required to be tested, which contained seven contracts and are listed in Schedule B and a list of forty-six total contracts for which 15% of the number of contracts were to be tested. We randomly selected seven contracts from the forty-six to meet the 15%. The contracts selected are also listed in Schedule B. The Council then provided a detailed listing of all vouchers for the fourteen contracts selected. We utilized Monetary Unit Sampling (MUS) methodology to make selections from the voucher listing provided to us and selected 100% of the vouchers from the voucher listing on certain contracts which had a limited number of vouchers on the voucher listing. Monetary unit sampling methodology was determined to be the best method for sampling the population as a monetary unit sampling biases higher valued items. A million-dollar item is more likely to be selected than a hundred dollar item. The chance of an item being selected is directly proportional to its size. Monetary unit samples are useful for substantive or overstatement tests. By biasing higher value items, an MUS sample provides a high level of assurance that all significant items in the population are subject to testing. When testing for overstatement, it is the high value items that present the greatest risk of containing a material error. The population for the MUS was the absolute value of the voucher amounts being sampled. Voucher amounts can contain negative as well as positive numbers and negative numbers cannot result in overstatement. AN NOFPFNOFNT /FAVER AND DWELL :LP DALLAS MEMBER OF 8AER N [1 EPUFED PUBUC ACCCUNT, NTS AND ONSULANIS AFRIT )RVE 99TE ALLAS X INTERNAHONAL WWWEAVEALLDCOM 1 912) 491) 910 H972)

9 July 12, 2011 Page 2 We utilized computer assisted auditing techniques through the use of ACL to conduct monetary unit sampling. To do this, we imported the voucher listing for the listed contracts in the table below into ACL, a data extraction and analysis software formerly known as audit command language, and utilized the monetary unit sampling function with a confidence level of 85% (determined adequate for an assessed level of low-risk). Invoices selected for each project are listed in Schedule C. Contracts sampled utilizing monetary unit sampling in ACL were as follows: Contract PlO NUMBER Project Name Amount Consultant Thoroughfare Assessment Project (TAP) 2.0 $ 4,199,763 Kimley Horn & Assoc, Inc Thoroughfare Assessment Project (TAP) 3.2 2,911,276 Kmley Horn & Assoc, Inc Pay-As-You-Drive Insurance Pilot Program 1,267,436 Progressive Casualty Insurance Dallas Area Rapid Transit (DART) Travel Pattern Analysis Survey NuStats Congestion Management Program - Data Collection Project 355,000 SkyComp. Inc. TR Air Quality Public Awareness Campaign 250,000 Great Mileage TR Eastside Project Intersection Improvement Project at US 75 and Cambpell 464,712 City of Richardson TR Regional Vanpool Program DART TR EPA.ARRA; On Road Heavy Duty Replacement and Repower Project 1,599,319 Southeastern Freight Line As some of the contracts had a limited number of vouchers, we selected 100% of the vouchers from the voucher listings and did not conduct monetary unit sampling on the listed contracts below. The following contracts had 100% of the vouchers selected from the voucher listing provided. Contract PlO NUMBER Project Name Amount Consultant TR Boys and Girls Club of Arlington, Inc. - Reimbursement to Lasseter Bus & Mobility $ 700,000 Lasseter Bus and Mobility Regional Hauler Emissions Reduction Incentive Agreement - RRHP ,535 IESI TX Corporation Clean Vehicle Technology Program 320,000 Rockwall ISD TR NCT Clean School Bus Program 777,776 Wylie Independent School District TR NCT Alternative Fuel and Advanced Technology Investments (DOE-ARRA) 1,723,812 New Bern Transport Corp.

10 July 12, 2011 Page 3 PROCEDURES PERFORMED AND FINDINGS In accordance with your instructions, our procedures and findings on the vouchers selected from the selected contracts listed in Schedule B are as follows: A. We verified the consulting contracts listed in Schedule B contained documented and reviewed labor hours and rates by reviewing the Form 60 or applicable budget pages. From the vouchers selected, we reviewed invoices for proper documentation and approval of overhead rates, profit calculations, new salary rates, labor hours, labor rates, etc. No exceptions were found as a result of applying those procedures. B. We performed a financial review of invoices related to the consulting contracts listed in Schedule B for evidence of verification and calculation of overhead rates as agreed upon in the contract. No exceptions were found as a result of applying those procedures. C. We performed a financial review of invoices related to the consulting contracts listed in Schedule B for evidence of verification and calculation of allowable profit as agreed upon in the contract. No exceptions were found as a result of applying those procedures. D. We reviewed documentation and final work product to verify that the Council received proper authorization from the funding agency by examining the Payment Authorization Memo s (PAM) to ensure the financial payment authorization was received prior to release of retainage held. No exceptions were found as a result of applying those procedures. E. For all contracts listed in Schedule B, we performed a financial review of invoices related to the consulting contracts listed in Schedule B for evidence of DBE (Disadvantaged Business Enterprises) participation as agreed upon in the contract. No exceptions were found as a result of applying those procedures. F. We verified invoices related to the consulting contracts listed in Schedule B contained proper determination of allowable costs in accordance with 0MB Circular A-87, Cost principles for State, Local, and Indian Tribal Governments. No exceptions were found as a result of applying those procedures.

11 July 12, 2011 Page 4 G. We verified invoices related to the consulting contracts listed in Schedule B reflected travel costs as agreed upon in the contract ($125 sustenance per day, etc.). No exceptions were found as a result of applying those procedures. We were not engaged to, and did not: conduct an examination, the objective of which would be the expression of an opinion on compliance. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of the Council s Executive Director, the Transportation department, management, and the Funding Agency, and is not intended to be and should not be used by anyone other than these specified parties. WEAVER AND TIDWELL, L.L.P. Dallas, Texas July 12, 2011

12 Schedule A AGREED-UPON PROCEDURES FOR THE NORTH CENTRAL TEXAS COUNCIL OF GOVERNMENTS For invoices under the Transportation consulting contracts listed in Schedule B to our engagement letter dated May 18, 2011 we will perform a financial and non-financial review of the related contract files under the following attributes: 1. Documentation and review of labor hours and rates by reviewing Form 60 (or applicable budget pages) for proper documentation and approval of overhead rates, profit calculations, new salary rates, etc. 2. Verification and calculation of overhead rates as agreed upon in the contract. 3. Verification and calculation of allowable profit as agreed upon in the contract. 4. Documentation and review of final work product to verify that the Council received proper authorization from funding agency by examining the Payment Authorization Memo s (PAM) to ensure that they received financial payment authorization prior to release of retainage held. 5. Verification of Disadvantaged Business Enterprise Participation as agreed upon in contracts. 6. Determination of allowable costs per 0MB Circular A-87 (2 CFR 225), Costs Principles for State, Local and Indian Tribal Governments. 7. Determination if travel costs are as agreed upon in the contract ($125 sustenance per day, etc.).

13 - PlO Data RRHP Schedule B Contract Close NUMBtrR Project Name Beg Date Ending Data Out Dit. Project Mgr Amount Consultant Project Status (9)7 itoroughtare Assessment Project (TAP) /30/2009 S 4, l(jmley Horn & ASsoc, Inc. complete complete complete complete complete Audit 1/ Netale Badger 2,911,278 KImley Hom&Assoc. Inc. 1,267,438 Progressive Casualty Insurance )0? itioroughlere Assessment Project (TAP) 3.2 5/5/ /31/2009 9/ /31/2008 8/ Hopkins AIICJa 2/19/200? 09/ ,971 NuStats Collection Project 355,000 SkyComp. Inc. 4/13(2007 5/ /2008 5/1/ ,000 Great M8eage 4/14/2010 Natalie Betigai )45 Pay As-You-DrIve insurance Pilot Program 0707 (1078 Dallas Nsa RapId Trnslt (DART) Travel Pattern Malysls Survey 2/ Chad Edwards 07 07(1104 CongestIon Management Program - 10/ Molly Rendon TN-GB-UI 12 All QualIty Public Awareness Cenrpingn 1/30/2010 MindyMtza Boys and Girls CRIb or Mlnglon, Inc. - Reimbursement to Lasseter bus Jul-Il Jul-il Jul-il 2/28/ R4] MobilIty 700,000 Lessetar Bus and MobIlity 7121/ /10/2009 Sch.dulw Jut-il Jul-il Jul-it Jul-il Jul-Il Jul-il a (930 RegIonal Hauler Emissions Reduction Incentive Agreement - 8(1/2007 Lad Clark complete Jul-il 0/0/-0(3135 Clean Vehicle Technology Program 320,000 Rodkwat SI) 01// /7)2007 FR ( baslside Project Intersection Improvement Project at US 75 and Campbell 464,712 City of RIchardson 3/19/2007 9(29/ NaLeile Beltger complete Jul-il TN NCT Clean School Bus Program 777,776 Wylie Independent School DistrIct 10/15/ !l4/2009 TN RegIonal Vanpool Prgcitm 315,1)00 DART 1011/ /14/2009 GenIe Reese complete Jul-Il 10)25)2010 Carrie Reese complete Jul-il TR-iQ-0288 EPA-ARItA On Road Heavy Duly Replacement and Repower Project 1,599,319 Southeastern Freight Line 7)9/2009 9/15/ /22/2010 CarrIe Reese complete Jul-il Close Out Dale lriantt*ies the dale that final financial obligations were wrnploted br me contract (last 0! either retelnage panacst or reimbursement receipt from turnilng agency) TN NCT,43temallne Fuel and Advanced Technology Investments (OOE-ARRA) 1,723,812 New Bern Transport Corp. 9/ /22/2010

14 VOUCHER SELECTIONS TO PERFORM AGREED-UPON PROCEDURES Schedule C PlO Numb., Project neme Thoroughfare Assessment Project (TAP) 2.0 Consultant Kmtey Horn & Assoc., Simple Method MUS Items ssmpl.d Voucher 4 Amount , , , , , (48,146.69) , , , , , , , , , ,703, ,862, , , , , , , , , , , , , , , , , ,487, , , (1,961,882.29) PlO Numb., Project name Thoroughfare Assessment Protect (TAP) 3.2 Consultant t<imley Horn & Assoc., Inc. Sample Method MUS Items sampled Voucher N Amount ,649, , , , , , , , , , , , , , , , , , , , , , , , , , , , , P10 Number Project name Pay-As-You-Drive Insurance Pilot Program Consultant Progressive Casualty Insurance Sample Method MUS Items sampled Voucher N Amount 26, , , , , ,800,00 14, ( ) 36,697,50 36,987,50 14, , , (14,445.00) 60, ,518, 10 PlO Number Project name Daias Area Rapid Trsnst (DART) Consultant NuStats Sample Method MUS Travel Pattern Analysis Survey Items sampled Voucher# Amount , , , , , , , ,579.24

15 VOUCHER SELECTIONS TO PERFORM AGREED-UPON PROCEDURES Schedule C PlO Number Project name Congestion Management Program - Data Collection Protect Consultant SIq,Comp. Inc Sample Method MUS P/O Number TR Project name Air Quality Public Awareness Campatgn Consultant Great Mileage Sample Method MUS Itam sampled Voucher# Amount Items sampled Voucher# Amount , , , , , , , , , , PlO Number TR Project nam. Boys and Girls Club of Arlington, Inc. - Reimbursement to Lasseter Bus & Mobility Consultant Lasseter Bus and Mobility Sample Method 100% items sampled Voucher # Amount ,596, , P/O Number Project name Clean Vehicle Technology Program Consultant Rockwell SD Sample Method 100% Items sampled Voucher # Amount I , , PlO Number TR Project name Regional Vanpod Program Consultant DART Sample Method MIJS items sampled Voucher # Amount , , , , , , , , , , , , PlO Number TR Project name Eastside Project Intersection Improvement Project at US 75 and Campbell Consultant City of Richardson Sample Method MUS Items sampled Voucher # Amount , , , P/O Number Project name Regional Hauler Emissions Reduction Incentive Agreement - RRHP Consultant ESI TX Corporation Sample Method 100% Items sampled Voucher# Amount P/C Number TR Project name NOT Clean School Bus Program Consultant Wylie Independent School District Sample Method 100% Items sampled Voucher # Amount , , P/O Number TR Project name EPA-ARRA On Road Hea Duty Replacement arid Reper Project Consultant Southeastern Freight Line Sample Method MUS items sampled Voucher# Amount , , , (554,406.34) , P/O Number TR Project name NCT Alternative Fuel and Advanced Technology Irrvesth rents (DQE-ARRA) Consultant New Beni Transøort Corp. Sample Method 100% items sampied Voucher Amount ,044.20

16 Exhibit El RESOLUTION ACCEPTING REVIEW RESULTS FROM THE ENVIRONMENTAL PROTECTION AGENCY (EPA) FOR AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009 (ARRA) ON-ROAD HEAVY-DUTY DIESEL AND NCTCOG ARRA SMARTWAY TECHNOLOGY UPGRADE PROGRAMS WHEREAS, the (NCTCOG) is authorized by law to conduct such coordinating and technical activities as may be required to guide the unified development of the area, eliminate duplication, and promote economy and efficiency through areawide planning; and, WHEREAS, the Unified Planning Work Program (UPWP) provides that consultant assistance may be requested to perform planning and implementation projects in the UPWP; and, WHEREAS, NCTCOG was awarded two EPA-funded ARRA grants, specifically the On-Road Heavy-Duty Deisel and Smartway Technology Upgrade Programs, totaling $3,738,352; and, WHEREAS, EPA conducted a limited administrative and financial management system review for the above referenced EPA-funded ARRA grants; and, WHEREAS, EPA identified one area that needed to be improved to more fully comply with federal procurement requirements, specifically oversight of subgrantee procurement; and, WHEREAS, NCTCOG addressed EPA s concerns and recommendations by creating Third Party Procurement Procedures and reviewing the procurements of all subtgrantees under these two grants; and, WHEREAS, EPA has communicated to NCTCOG that its response adequately addresses the issue raised in the EPA review. NOW, THEREFORE, BE IT HEREBY RESOLVED THAT: Section 1. Section 2. Section 3. The EPA Limited Scope Administrative and Financial Management System Review and NCTCOG s Management Response, included as Attachment 1, for the EPAfunded On-Road Heavy-Duty Diesel and Smartway Technology Upgrade Programs awarded to NCTCOG be hereby accepted. Staff is authorized to negotiate the return and/or implementation of additional activities for the approximately $60,000 in items deemed ineligible for failure to follow procurement requirements. This resolution shall be in effect immediately upon its adoption. lorth Central Texas Council of Governments Councilmember, City of Dallas I hereby certify that this resolution was adopted by the Executive Board of the North Central Texas Council of Governments on October 27, Stephen Terrell, Secretary-Treasurer Mayor, City of Allen

17 , ATTACHMENT 1 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY WASHINGTON. D.C OFFICE OF. \DMINIsFRArI0N IC 3qQ14C D EthSOL.iRCES May 26, 2011 \IANAGEMENT Carrie Reese Program Manager Air Quality Policy and Program Development P0 Box 5888 Arlington, Texas Dear Ms. Reese: Royal Connection Inc. and its subcontractor Leon Snead & Company, P.C. completed a limited scope review of the administrative and financial management systems for managing Environmental Protection Agency (EPA) grant funds. The review was requested by EPA and conducted during the period of April 26 through May 12, The review disclosed one system weakness that needs improvement for compliance with EPA grant requirements. The system weakness noted during the review is addressed in the enclosed report. Please review the finding and recommendations and provide a response on the action taken to correct the system weakness. Your response should also indicate what corrective action you have taken or contemplate to implement the recommendations. If corrective action has not already taken place, please provide the projected date when corrective action will be completed. Please submit your response to Mr. Leon Snead at the following address by July 5, You may also send a copy of the response to my attention at the address shown below. Leon Snead & Company, P.C. U.S. Environmental Protection Agency 416 Hungerford Drive, Suite Pennsylvania Avenue, NW (3903R) Rockville, MD Washington, DC Attn: Kysha Holliday We appreciate the assistance received from all of your staff members during the onsite review. Enclosure Sincer ly,. JLCC Kysha lolliday, Compliance Officer Nanop Policy, Training and Compliance Division /

18 Environmental Protection Agency Office of Grants and Debarment Limited Scope Administrative and Financial Management System Review of Arlington, Texas

19 Background Royal Connection Inc. and its subcontractor Leon Snead & Company, P.C. completed a limited scope review of the administrative and financial management systems. The review was made at the request of the U.S. Environmental Protection Agency (EPA), Office of Grants and Debarment, to assist the office in its oversight of EPA grant funds. The (the Council) is a voluntary association of cities, counties, school districts, and special districts within the 1 6-county North Central Texas region. It was established in January 1966, authorized by State enabling legislation, to assist local governments in planning for common needs, cooperating for mutual benefit and coordinating for sound regional development. For the fiscal year ended September 30, 2010, the Council reported revenue of $1,024,554 and expenditures of $1,119,292. At the time of the review, the Council had two active EPA assistance agreements funded under the American Recovery and Reinvestment Act of The purpose of each agreement is summarized below. 2A The agreement was awarded June 12, 2009, to provide funding for the Council to fund projects that will reduce emissions within the Dallas/Fort Worth ozone non-attainment area and along the Blue Skyways corridor. 2A The agreement was awarded June 12, 2009, to provide the Council with funding for verified Smart Way and emission reducing technologies, including auxiliary power units, trailer aerodynamics (including side skirts and/or gap reducers), low rolling resistance tires and cetane enhancers, for seven long-haul trucking companies, which either are headquartered or have major bases in North Central Texas. Objectives, Scope & Methodology The review objectives were to assess the effectiveness of the Council s internal controls and to determine if its administrative and financial management systems met the requirements outlined in the Code of Federal Regulations (CFR), Office of Management and Budget cost principles, and the terms and conditions of the EPA assistance agreements. The review included an evaluation of the Council s administrative and financial reporting procedures and testing of selected transactions from the period of January 1, 2010 through October 4, 2010, as they related to the EPA assistance agreements identified in the table below. Agreement Agreement Amount Drawdowns Number Period of Award (01/01/10-2A * 06/12/09-09/30/11 I $2,188,195 $ /04/10) 2A ** 06/12/09-06/30/1] 1,550, ,529 Totals $3,738,352 $1,249,937 * One drawdown was selected for testing. 1* Two drawdowns were selected for testing

20 RESULTS OF REVIEW Procurement Policies and Procedures The Council did not have procurement policies and procedures in place to ensure compliance with the applicable federal procurement system standards. This occurred because the Council s regulations were intended for its procurements and did not address procurements activities with subgrantees. As a result, we have questioned $1,137,496 in costs charged to the two assistance agreements. Under 40 CFR 31.36, the Council is allowed to follow its own policies and procedures consistent with state and local laws and regulations in procuring property and services under a federal grant, if the policies and procedures meet certain specific standards. 40 CFR, requires procurement by competitive proposals when a cost-reimbursement type contract exceeding $100,000 is awarded. Competitive proposals require that: Requests for proposals be publicized and identify all evaluation factors and their relative importance; Proposals will be solicited from an adequate number of qualified sources; A method for conducting technical evaluations of the proposals received and for selecting awardees; and Awards will be made to a responsible firm whose proposal is most advantageous to the program with price and other factors considered. Each subgrant reviewed included a clause requiring the subgrantees to comply with the procurement standards in the Department of Transportation (DOT) regulations instead of EPA regulations. However, DOT regulations and the EPA regulations are both derived from the common rules for all Federal grants and are essentially the same. Prior to the submission of grant applications to EPA, the Council solicited applications from public and private entities for their participation in the proposed grant projects. Once the EPA grants were approved, the Council entered into subgrants with the public and private entities. The purpose of the subgrants was to reimburse the subgrantees for their procurements made under the subgrants. The subgrantees included in our sample are identified in the table shown on the following page.

21 Appendix I Results of Testing Agreement Total Drawdowns Questioned Unallowed Number Drawdowns Tested Costs Costs Notes 2A $ 451,408 $ 441,809 $ 433, A , , , Totals $1,249,937 $1,149,272 $1,137, Notes 1. The questioned costs are procurement charges made to the agreements without adequate documentation on file to show compliance with the federal procurement standards.

22 Mr. Leon Snead July 5, 2011 Page Two expectations on how subgrantees will comply with these requirements. Regarding appropriate oversight, the policy requires NCTCOG to approve a subgrantees procurement process for procurements that exceed $100,000. In addition, subgrantees will be required to submit documentation regarding its procurement as a condition of reimbursement. Lastly, the policy will be used as a guide for staff oversight of subgrantee compliance. Review of Subgrantee Procurements NCTCOG conducted a review of all subgrantee procurements as recommended in the review, which is summarized in Attachments 3 and 4. There were a total of 15 subgrantees for the two EPA assistance awards. The 15 subgrantees conducted a total of 31 separate procurements. The table below summarizes NCTCOG s conclusions regarding each of the subgrantee procurements. On-Road Heavy-Duty Diesel Smartway Technology Upgrade Total Replacement and Repower Project Project Agreement 2A Agreement 2A (Attachment 3) (Attachment 4) Meets Standards Meets Majority of Standards Does Not Meet Standards EPA Questions Pending Additional Documentation Totals As the table above illustrates, 17 of the 31 procurements meet all federal procurement standards. For these procurements NCTCOG proposes no additional action. Nine of the 31 procurements meet the majority of the federal procurement standards, but are not in full compliance. NCTCOG proposes to transmit a written reprimand to the subgrantees citing the need for corrective action for any future NCTCOG subawards utilizing federal funds. One subgrantee, Letco, secured used vehicles through an auction (see line item highlighted on Attachment 3). Letco was able to obtain competitive pricing resulting in a significant savings. However, NCTCOG would like direction from EPA on whether procurement through an auction available to the general commercial market comports with federal procurement standards. Two of the 31 procurements are pending review of additional documentation. This review is expected to be complete by July 22, The remaining two procurements, in NCTCOG s opinion, did not meet the federal procurement requirements or their intent, specifically Southeastern Freight Lines for installation services and Production and Rigging Resources for auxiliary power units. (See line items highlighted on

23 ATTACHMENT 2 ADDENDUM #1 THIRD PARTY PROCUREMENT PROCEDURES NORTH CENTRAL TEXAS COUNCIL OF GOVERNMENTS TRANSPORTATION DEPARTMENT JUNE 2011

24 o Placing unreasonable requirements on firms/service providers/vendors/consultants in order for them to qualify to do business; o Placing geographical preferences in the evaluation of bids or proposals; o Noncompetitive practices between firms/service providers; o Organization conflicts of interest: o Requiring unnecessary experience and excessive bonding requirements; and, o Any arbitrary action in the procurement process. Written Procurement Policies The subgrantee shall have written procurement procedures and may adopt by reference procedural requirements of 49 CFR Part or applicable federal law. Procurement Guidelines NCTCOG, in reviewing subgrantee procurement procedures and policies, will determine consistency with 49 CFR Part or the applicable federal law regulating procurement. Stated therein are the governing regulations and implementing guidelines for all procurement activity undertaken with grant funds. Some of those items, with particular applicability to NCTCOG grants, are: Procurement Standards 1. Subgrantees will maintain a contract administration system which ensures that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. 2. Procedures will allow for analysis of the most economical approach in purchasing, including ease versus purchase alternatives. Each proposed procurement must be reviewed to avoid the purchase of unnecessary or duplicative items. 3. Subgrantees will make awards only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. Consideration will be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources. 4. Subgrantees will maintain records sufficient to detail the significant history of procurement. 5. These standards do not relieve the subgrantee of any contractual responsibilities under its NCTCOG contracts. The subgrantee is responsible, in accordance with good administrative practice and sound business judgment, for the settlement of all contractual administrative issues arising out of any procurement entered in support of a NCTCOG grant. These include, but are not limited to, source evaluation, protests, disputes, and claims. Method of Procurement 2 All procurement transactions shall be made by one of the following methods: 1. PROCUREMENT BY SMALL PURCHASE PROCEDURES 2Explicit federal and State regulations apply to each procurement method. Subgrantees may proceed with procurement activities only after careful study of the regulations reveals all requirements have been met. 3

25 Formally publicizing a request for proposals which normally results in conducting competitive negotiation with more than one source submitting an offer. This method is generally used when conditions are not appropriate for the use of sealed bids. All evaluation factors and their relative importance will be identified. There will be procedures for technical evaluations of the proposal and selection of an awardee. Awards are made to the proposal most advantageous to the program, with price and other factors considered. Procurements over $100,000 competitive proposal must be submitted to NCTCOG for review and approval 30 days prior to initiating the procurement. NCTCOG reserves the right to deny reimbursement upon failure to comply with the approved procurement process or failure to adequately address NCTCOG s comments concerning the proposed procurement process. 4. SOLE SOURCE PROCUREMENT Noncompetitive items are items available from one source only. In connection with the purchase of noncompetitive items only available from one source, a certification of the conditions and circumstances requiring the purchase shall be filed by the subgrantee with the appropriate NCTCOG project manager. Upon receipt by the NCTCOG project manager, the certification will be forwarded to the appropriate NCTCOG personnel for approval of the request. Only after receiving authorization from NCTCOG will the purchase be deemed a sole source procurement. All authorizations must be received prior to any procurement transactions. The appropriate NCTCOG personnel may authorize a sole source procurement under the conditions defined in state law, provided that the sole source procurement shall be made according to the established purchasing rules and regulations and shall not be made so as to circumvent the competitive purchasing requirements. 5. PURCHASES UNDER GOVERNMENTAL COOPERATIVE PURCHASING PROGRAMS Public entities that can purchase under State contracts or other governmental cooperative purchasing programs can do so without prior approval or obtaining written quotes. All other purchases must follow the guidelines outlined in the Contracting Procurement Procedures. 6. EMERGENCY PROCUREMENT NCTCOG may approve an emergency procurement under the conditions defined in federal and State law, provided such emergency procurement shall be made with such competition as is practicable under the circumstances. Subgrantee Files Each subgrantee must maintain adequate files to support any purchases made. A copy of the quotes that were obtained (purchases between $3, and $100,000.00) or a copy of the legal notice must also be on file to support the choice of lowest and/or best bid. The subgrantee must provide adequate,ustification if the purchase is not awarded to lowest and/or best bidder. 5

26 ,. SmartWay Technology Upgrade Project Agreement 2A NCTCOG Subgrantee Procurement Review ATTACHMENT 4 A B C 0 E Purchases SlOOt( Intergovernmental Amount Purchas.s Sod. Coop.rstlv. Purcflans Grant Procurement Sub $3,000, NCTCOG Protram Arrrariilo memo iv 4rarrls. Subgrante. e Vendor Item Procured Relmbwe.d by s $3,000 but S.af Bid Competltln Source Purchasing Comments NCTCOG ConclusionslOuesttona Obtained 3 quotes (Ttiermo tong Fort Worth, Therrrto e Malority xl Federal upon lowest trio Ausiliary Power Units S 373, ,80000 V F F long Dallas, and Thermo King Amardo); selector based Procureitrrerit Stanoerds pricing from 2 sources (Michelar. BrIdgestone); Meets Federal Procurement Obtained fit liar 445 *95 Miclrniiv Low Rolling Resistance Tires $ S 44,05200 F, V - selection based upon lowest price Standards Denver Utility); selection based upon lowest bid Slarrdards Utility Trailer Side Slorls 5 55, $ 55,93590 F, V Obtained 3 quotas (Dallas Utility, 9mar80 Urillty, and Meets Federal Procurement ieeurc:.trermo Auxiliary Power Unils S F, Obtained mu11t4e quotes; selection based tton beet Meets Federal Procurement value Standards edled 2 quotes lmte66 end Goodyear), selection Meets Meplity ot Fedelal MIchelin North America Low Rolling Resistance Tires $ 206, , V F F Suuiuasi,n Low PrOIllflQ. based sport bestvalsra ProcruementStarida,ds $ Snef Tee ioc F 11 L s.. Ridge Corp Trailer Side Skirts $ 58, $ 54, F, V ObtaIned 4 quotes (Alrodyne. Transtea, GranDomaleco. Meets Federal Procurement MidAllanlic); aelechon based upon best value Standarda ObtaIned 2 quotes (Power Services and Cenlron). Meats Malorltp 01 Federal Power Srnice I Cetans Enhancers $ 113,66472 S V F F =, selection based upon best value Procurement Standards DnsiQv Aueillary Power Units S 238, S OOj V F F Obtained 2 quotes; selection based upon best value rarrspuitalivn Southwest International $ 4b0,32 j, $ 181, ootstandingl V F F Obtained 2 quotes; selection based upon best aslue Trailer Side Skids Meets Uslority of Federal Procurement Standards rurenersmeaururr. i:n:poi1at,, selection S 10,464 Convoy Servicing J Auxiliary Power UnhIs $ 10, S 10, F, Obtained 2 quotas> 1ItW Usets fedwel Proct.eement P oducborr nd $ 9590 Therpo King 0*06655 Atsakleq Poww 066* 1 >,20 S 9, based upon best value Standards -,, ,....:.,, :,...,,..., Sfende66... Greal Dune Truilarn Low Rollin Meets Federal Procureirrent Procurement Low trolllrrg Resistance Tires eel. $90,327 outstanding F, V Obtained 5 quotes; selection based upon best value Fiito-Lay 0 Resistance Tires est $66,000 outstanding F, V Obtained 5 quotes; selectlarl based upon best value Great Dune Trailers Trailer Side Skirts ,000 outstanding F Pesdlng additional documenlatiorslreniew Pending additional documentation/review Pending additional documentahoviraviaw V piocuieiouoi uritriorl suit by Subgravlea drool Dave Trails/a Gap Redrsiers rot $24,000 outstanding F Pending additional dccumertlatlorilreview F fedeiul standard br procurunseril 4iaoieC rio, not beer reinibuised for actviiy outstaoiii4 suh nt 1CG, li

27 Exhibit Eli-I 0-09 RESOLUTION AUTHORIZING RECEIPT OF LOCAL FUNDS AND EXECUTION OF NECESSARY AGREEMENTS FOR THE SOUTHERN DALLAS COUNTY HIGHWAY TRAFFIC PROGRAM WHEREAS, the (NCTCOG) has been designated as the Metropolitan Planning Organization (MPO) for the Dallas-Fort Worth Metropolitan Area by the Governor of the State of Texas in accordance with federal law; and, WHEREAS, the Dallas-Fort Worth region is in nonattainment of the federal air quality standard for ozone and NCTCOG is actively involved in the development and implementation of the State Implementation Plan for air quality; and, WHEREAS, Dallas County, the City of Dallas, and the Regional Transportation Council (RTC) have developed a funding strategy to address the funding shortfall for the highway traffic program for Fiscal Year 2012 through a mix of financial contributions and cost savings; WHEREAS, the RTC programmed $1 million to Dallas County for the City of Dallas financial contribution to the Southern Dallas County Highway Traffic Program and in return, the City of Dallas has agreed to repay the RTC contribution, plus 2 percent interest, totaling $1,045,000 on or before January 1, 2014; WHEREAS, NCTCOG has authority Chapter 791 of the Government Code and Local Government Code Section , to contract for and receive funds from participating member government. NOW, THEREFORE, BE IT HEREBY RESOLVED THAT: Section 1. The is authorized to enter into an agreement for the City of Dallas to repay $1,000,000 for the RTC contribution on behalf of the City of Dallas for the Southern Dallas County Highway Traffic Program. Section 2. The funds identified in Section 1 shall be repaid no later than January 1, 2014, with 2 percent simple interest, totaling $1,045,000. Interest shall be prorated accordingly if funds are repaid prior to January 1, Section 3. The Executive Director is authorized to execute this agreement on behalf of the. Section 4. I 4 I ; This resolution shall be in effect immediately upon its adoption. LirT4(opPreent Councilmember, City of Dallas 1/ I hereby certify that this resolution was adopted by the Executive Board of the North Central Texas Council of Governments on October 27, Stephe? TerlI, Secretary- reasurer Mayor, City of Allen

28 Exhibit Ell-lO-lO RESOLUTION AUTHORIZING A MEMORANDUM OF UNDERSTANDING FOR THE NATIONAL SCIENCE FOUNDATION SUSTAINABILITY RESEARCH NETWORK (SRN) COMPETITION REQUEST FOR PROPOSALS WHEREAS, the (NCTCOG) has been designated as the Metropolitan Planning Organization (MPO) for the Dallas-Fort Worth Metropolitan Area by the Governor of the State of Texas in accordance with federal law; and, WHEREAS, the Dallas-Fort Worth region is in nonattainment of the federal air quality standard for ozone and NCTCOG is actively involved in the development and implementation of the State Implementation Plan for air quality; and, WHEREAS, vehicle emissions that create ozone; and, it is the goal of the RTC to encourage the implementation of projects to reduce WHEREAS, the Fiscal Year (FY) 2012 and FY2013 Unified Planning Work Program includes air quality initiatives to reduce vehicle and equipment emissions; and, WHEREAS, the University of Oklahoma, Center for Analysis and Prediction of Storms has proposed creation of a consortium with NCTCOG and other partners to apply for the Sustainability Research Networks (SRN) Competition Request for Proposals through the National Science Foundation. NOW, THEREFORE, BE IT HEREBY RESOLVED THAT: Section 1. The Executive Director for NCTCOG is authorized to enter into a Memorandum of Understanding with the University of Oklahoma as part of a consortium required for the National Science Foundation Sustainability Research Networks (SRN) Competition Request for Proposals. Section 2. This resolution shall be in effect immediately upon adoption. I Linda1(thp, Pres rderft / II Councilmember, City of Dallas I hereby certify that this resolution was adopted by the Executive Board of the North Central Texas Council of Governments on October 27, Lr -7 Stephe Terrell, Secretary-Treasurer Mayor, City of Allen

29 Exhibit Eli-I 0-11 RESOLUTION ENDORSING ADMINISTRATIVE ACTIONS AUTHORIZED UNDER THE CLEAN VEHICLE, EQUIPMENT, AND TECHNOLOGY FUNDING POLICY WHEREAS, the North Central Texas Council of Governments (NCTCOG) has been designated as the Metropolitan Planning Organization (MPO) for the Dallas-Fort Worth Metropolitan Area by the Governor of the State of Texas in accordance with federal law; and, WHEREAS, the Dallas-Fort Worth region actively involved standard for ozone and NCTCOG the State Implementation Plan for air quality; and, is is in in nonattainment of the federal air quality the development and implementation of WHEREAS, on February 24, 2011, Executive Board authorized a policy to streamline clean vehicle, equipment, and technology project delivery, and ensure comptiance with grant commitments; and, WHEREAS, NCTCOG executed Agreements with vehicle, equipment, and technology type projects; and, Subgrantees, for implementation of clean WHEREAS, it has become necessary for NCTCOG staff to make additional administrative adjustments to Subgrantee Agreements previously authorized by the Executive Board. NOW, THEREFORE, BE IT HEREBY RESOLVED THAT: Section 1. Agreement modifications between the North Central Texas Council Governments and Subgrantees, as outlined hereby endorsed. in Attachment 1, of be and are Section (4 2. This resolution shall be in effect immediately upon its adoption. Linda Kb, Councilmember, President City of Dallas I hereby certify that this resolution was adopted Council of Governments on October 27, by the Executive Board of the North Central Texas I Stephen Terrell, Secretary-Treasurer Mayor, City of Allen