Subject: RE: Operational Audit of CAISO by FERC
From: [email-masked]
To: [email-masked]
Cc: [email-masked]
Date: Fri, 19 Oct 2001 09:26:34 -0700 (PDT)

Thanks.

 -----Original Message-----
From: 	Perrino, Dave  
Sent:	Friday, October 19, 2001 9:35 AM
To:	Steffes, James D.
Cc:	Alvarez, Ray
Subject:	FW: Operational Audit of CAISO by FERC

Jim,

The answer to your timing question is yes, the audit is supposed to be completed by mid-Jan 2002, auditing the period 10/00-10/01.

Dave

 -----Original Message-----
From: 	Alvarez, Ray  
Sent:	Thursday, October 18, 2001 1:44 PM
To:	Perrino, Dave
Subject:	FW: Operational Audit of CAISO by FERC

Dave, per your request: 

Here are some bullets briefly describing the FERC audit high points.  I think the scope is "right on the money" and the timing is reasonably good also.  The text of the audit solicitation follows the bullets.  I've made contact with Andy Sakallaris, head of FERC procurement, to attend the pre-bid conference next Tuesday (assuming it is held, since expressions of interest thus far have been from CA based firms unwilling to make the trip to DC).  Ray

Audit description-  FERC seeks to take all appropriate steps for prospective improvements in California markets; accordingly, an independent operational audit of the CAISO will be performed to determine any areas in which the CAISO could enhance its effectiveness in fulfilling its responsibilities in operating the transmission system under its control and administering real-time energy markets.

Scope- Provide a comparison of the CAISO's actual operations and its FERC tariff and determine whether the CAISO's operations are adequately transparent to market participants.

Audit period- 10/1/00-10/1/01

Deliverables timing- Draft report due on January 9, 2002; final report due January 16, 2002.

Audit schedule-  Begins on November 1, 2001, and ends no later than January 4, 2002.

Pre-proposal conference- A conference is scheduled for prospective offerors at FERC next Tuesday; FERC will give a brief explanation of the requirements and clarify any questions asked.   

PART: U.S. GOVERNMENT PROCUREMENTS
SUBPART: SERVICES
CLASSCOD: R--Professional, Administrative and Management Support
  Services
OFFADD: Federal Energy Regulatory Commission (FERC), 888 First
  Street, NE, Washington, DC 20426
SUBJECT: R--OPERATIONAL AUDIT OF CALIFORNIA INDEPENDENT SYSTEM
  OPERATIOR. INC. CAISO
SOL FERC02RMT22071
DUE 102601
POC Charlotte Handley, 202-219-1156 or Andrew Sakallaris,202-219-1150
DESC: This is a combined synopsis/solicitation for commercial
  items prepared in accordance with the format in Subpart 12.6,
  as supplemented with additional information included in this
  notice. This announcement constitutes the only solicitation;
  proposals are being requested and a written solicitation will
  not be issued. FERC02RMT22071 is issued as a request for proposal
  and all provisions/clauses are those in effect through FAC
  97-27. This solicitation is unrestricted under NAICS number
  561. Statement of Work: I. BACKGROUND. The California electricity
  market has experienced great stress from Summer 2000 to Summer
  2001, with demand outstripping supply, wholesale prices rising
  dramatically, and key market participants becoming financially
  unstable. As a result, the California Independent System Operator,
  Inc. (CAISO), which operates the electricity transmission grid
  throughout most of California, was forced to adapt to rapidly
  changing circumstances. During all of this, the CAISO worked
  hard to ensure system reliability. Under the Federal Energy
  Regulatory Commission's market mitigation plan, wholesale prices
  stabilized in California in Summer 2001. The Commission seeks
  to take all appropriate steps for prospective improvements
  in California markets, including improvements to help the CAISO
  in effectively performing its increasing responsibilities.
  Accordingly, an independent operational audit of the CAISO
  will be performed to determine the areas, if any, in which
  the CAISO could enhance its effectiveness in fulfilling its
  responsibilities in operating the transmission system under
  its control and administering certain real-time energy markets.
  II. SCOPE OF WORK. The Independent Public Accounting (Contractor)
  firm shall perform an operational audit of the CAISO processes,
  practices, and procedures in accordance with Generally Accepted
  Government Auditing Standards (GAGAS). The Contractor shall
  provide a comparison of the CAISO's actual operations and its
  Commission tariff (procedures and tariff can be found at www.caiso.com).
  The Contractor shall ascertain whether the CAISO's operations
  are adequately transparent to market participants. To the extent
  possible, the Contractor shall also ascertain whether the CAISO's
  procedures and operations are consistent with the most effective
  business practice. III. AUDIT PERIOD. The audit of the CAISO
  shall cover the period commencing October 1, 2000, through
  October 1, 2001. IV. DELIVERABLES. The contractor must provide
  the Contracting Officer's Representative (COR) with a draft
  and final report detailing the findings, operating deficiencies
  and/or major observations and recommendations. These reports
  and other deliverables must be provided to the COR by the close
  of business on the following dates: 1) Draft Report - January
  9, 2002 2) Final Report - January 16, 2002. V. SCHEDULE. The
  operational audit will commence on November 1, 2001, and it
  must be completed no later than January 4, 2002. The contractor
  shall meet with the COR to discuss the audit no later than
  November 6, 2001. The contractor must provide the Commission
  with an operational audit plan no later than November 14, 2001.
  A detailed operational audit plan will be submitted to the
  COR for review, feedback, and approval. The COR or designated
  representative will review the plan. VI. Working Papers. The
  contractor shall prepare and provide a copy of work papers
  in accordance with GAGAS. All work papers shall include the
  purpose, sources of information, the procedures performed,
  results thereof, and conclusions as appropriate for the planning,
  internal control, compliance, and substantive testing phases.
  For all findings, work papers shall clearly show the condition
  or problem, criteria, cause, effect, and recommendation for
  improvement. All working papers shall be cross-referenced to
  audit programs, summaries, and final audit report. These documents
  will become the property of the Commission. During the course
  of the audit or upon completion of the audit work, the Contractor's
  audit report and work papers shall be subject to access and
  review by the Commission. A preproposal conference is scheduled
  for prospective offerors at FERC on Tuesday, October 16, 2001,
  at 10:00 am at 888 First Street, NE, Washington, DC 20426,
  Room 3M-3. FERC will give a brief explanation of the requirements
  and clarify any questions asked. Questions submitted in advance
  to A. Sakallaris ([email-masked]) is appreciated
  and preferable. Contractual, technical, and legal representatives
  will be on hand to answer any questions. Bring no more than
  three representatives and E-mail or phone A. Sakallaris, 202-219-1150
  to indicate the number and names of individuals attending.
  If unable to attend, E-Mail A. Sakallaris and provide the point
  of contact's mailing and E-mail address and FERC will arrange
  to deliver any additional information that may become available
  as a result of the pre-proposal conference. All offerors and
  subcontractors will complete and submit with their proposals,
  either the Organizational Conflicts of Interest (OCI) representation
  or the OCI disclosure (not both). Complete and submit the OCI
  Questionnaire. Request OCI information from A. Sakallaris.
  See DOE clauses 952.209-8 OCI-Disclosure and 952.209-72 OCI.
  Same/similar language will be incorporated into the resultant
  contract. Period of Performance: From approximately November
  1, 2001 to January 16, 2002. FAR Provision 52.212-1, Instructions
  to Offerors-Commercial (Oct 2000), applies. Addendum to FAR
  52.212-1 SUBPARAGRAPH (b) Reply by e- mail the proposal to
  FERC, ATTN: C. Handley, Division of Procurement, FA-12, 888
  First St, NE, Wash DC 20426, e-mail: [email-masked].
  It is our intent to evaluate based on initial proposals. Offerors
  shall submit five copies of their price and technical proposal,
  signed by an official authorized to bind the offeror, at the
  above address no later than 2:00 PM local time, Friday, October
  26, 2001. Price Proposal: Addendum to FAR 52.212-1 SUBPARAGRAPH
  (b)(6): The price proposal shall be completely separate from
  the technical proposal. Offerors must breakout pricing by month
  and provide (1) labor categories (2) corresponding firm-fixed-price,
  fully loaded labor rates (3) proposed number of hours estimated
  for each labor category (4) Other Direct Costs as applicable
  (subcontractor and travel). Supporting details shall also be
  provided as appropriate (e.g., travel destinations, number
  of trips, computer time, discounts offered (excluding prompt
  payment)). Addendum to FAR 52.212-1 SUBPARAGRAPH (c) The offeror
  agrees to hold the prices in its offer firm for 120 calendar
  days. Provision 52.212-2, Evaluation-Commercial Items (Jan
  1999), applies. Addendum to FAR 52.212-2 SUBPARAGRAPH, (a)
  Technical Proposal: Past Performance (30 points). Ensure that
  the company names, points of contact and phone numbers are
  current. The Offeror and each subcontractor proposed must each
  select three references to complete a "Contractor Past-Performance
  Evaluation." All areas of the sheet must be filled in. If an
  answer to a specific question is not provided, the applicable
  area must be annotated with the reason why (e.g. "Reference
  failed to provide an answer"). Higher scores will be assigned
  for contracts that are at least similar in size and complexity.
  FERC may obtain and evaluate information from sources other
  than those provided by the offeror. FAR 15.305(a)(2)(iv) states
  "In the case of an offeror without a record of relevant past
  performance or for whom information on past performance is
  not available, the offeror may not be evaluated favorably or
  unfavorably on past performance." For the purposes of this
  evaluation not being evaluated favorably or unfavorably means
  the offeror will receive a rating of "good or acceptable" on
  company past performance. To obtain a copy of the past performance
  form to be completed by the Offeror's references, request from
  A. Sakallaris by email. The Offeror will be responsible and
  ensure that the references submit or reply by e-mail their
  completed response to C. Handley, located at the above address
  by 2:00 PM local time, October 26, 2001. Offerors should also
  notify the references that FERC may be contacting them regarding
  the past performance information. Prior Audit Experience (25
  points). The offeror must cover in its proposal the extent
  of prior related experience in electric bulk power markets,
  and the ability to effectively and efficiently conduct this
  operational audit in accordance with GAGAS. The proposal must
  include previous and/or current experience, within the last
  3 years, where the offeror has performed audits similar in
  terms of size and complexity of this requirement. Higher scores
  will be assigned to those offerors who have demonstrated successful
  experience in electric bulk power markets within the last three
  years. To be acceptable, the services must have been satisfactorily
  performed and at least similar in terms of size and complexity
  to the work required under this contract. Understanding the
  Statement of Work (20 points). The proposal must clearly demonstrate
  in sufficient and precise detail the offeror's expertise in
  understanding and analyzing independent system operator tariffs,
  market operations and services, and transmission issues. The
  offeror must describe its ability to perform a comprehensive
  and thorough analysis of the electric bulk power market operated
  by the CAISO. Higher scores will be assigned to those offerors
  who demonstrate an understanding and greater knowledge of independent
  system operator tariffs, market operations and services, and
  transmission issues. Higher scores will also be assigned to
  offerors who demonstrate a comprehensive understanding of bulk
  power markets like those operated by the CAISO. Audit Methodology
  and Quality Control (15 points). The technical proposal must
  include the audit methodology and must address each phase of
  the audit. The proposal must identify specific aspects of each
  phase and explain how each phase/aspect is related. The offeror
  must include estimated completion times for each phase of the
  audit and address critical completion dates. The technical
  proposal must describe the audit approach to documenting systems
  and internal controls, and effective procedures, including
  consideration of risk and materiality, to determine the extent
  of audit testing. Quality control is an important part of the
  technical proposal. The proposal must demonstrate the offeror's
  internal quality control procedures. The proposal must include
  a copy of the firm's latest peer review report, comments, and
  the response to the peer review report. Higher scores will
  be assigned to those offerors who demonstrate and offer a sound,
  valid, effective, and innovative audit methodology that reflects
  an understanding of the statement of work. "Valid" entails
  the use of techniques that are known to be feasible with respect
  to the area addressed; "Effective" refers to the workability
  and appropriateness of the methodology. "Innovative" means
  the development and application of a novel, yet valid technique
  that will increase the effectiveness of the approach. Higher
  scores will be assigned to offerors who demonstrate sound and
  effective internal quality control procedures. Professional
  Qualifications (10 points). The offeror must describe in its
  proposal: 1) the professional qualifications of the staff that
  will be assigned to this contract and 2) demonstrate that it
  has sufficient resources to perform the audit and qualified
  staff to perform critical tasks necessary to support the audit.
  The written response must also include the following information
  for all staff participating on the audit: Labor Category (i.e.,
  Partner, Manager, etc.); CPA certification date (if applicable);
  Other applicable certification(s); Total years of audit and/or
  other experience; Advance degree(s) obtained; and Total years
  employed by the offeror. Higher scores will be based on offeror's
  educational background, recent work experience, and certifications
  obtain by their staff. In particular, higher scores will be
  given to those who offer recent experience with independent
  system operator tariffs, market operations and services, transmission
  issues, and bulk power markets like those operated by the CAISO.
  Addendum to FAR 52.212-2 SUBPARAGRAPH (a). Technical and past
  performance, when combined, are more important than price.
  However, award shall be made to the offeror whose proposal
  is determined to best meet the needs of the Government after
  consideration of all factors i.e., provides the "best value."
  "Best value," for the purpose of the contract is defined as
  the procurement process that results in the most advantageous
  acquisition decision for the Government and is performed through
  an integrated assessment and trade-off analysis between technical
  and price factors. Include a completed copy of Provision at
  52.212.3, Offeror Representations and Certifications-Commercial
  Items (May 2001) with offer. Clause 52.212-4, Contract Terms
  and Conditions-Commercial Items (May 2001), applies. Addendum
  to FAR 52.212-4: 1. 52.252-2 Clauses Incorporated By Reference
  (FEB 1998). This contract incorporates one or more clauses
  by reference, with the same force and effect as if they were
  given in full text. Upon request, the Contracting Officer will
  make their full text available. Clauses are as follows: 52.217-8
  and 52.217-9. Clause 52.212-5, Contract Terms and Conditions
  Required To Implement Statutes or Executive Orders-Commercial
  Items (May 2001) applies. Addendum to FAR 52.212-5: The following
  clauses are incorporated by reference: 52.203-6 with A1; 52.219-4;
  52.219-8; 52.222-21; 52.222-26; 52.222-35; 52-222-36; 52.222-37;
  52.225-13; 52.225-15; 52.225-16; 52.232-33; 52.239-1. E-mail
  questions to C. Handley at [email-masked]. no
  later than October 19, 2001. E-Mail C. Handley of your intent
  to submit a proposal no later than October 19, 2001.   
LINKURL: [email-masked]
LINKDESC: Click here to request copies of OCI questionnaire and <[email-masked]>
  the past performance form
EMAILADD: [email-masked]
EMAILDESC: [email-masked] <mailto:[email-masked]>
CITE: (W-282 SN5102V8)