Commissioner IT Report

October 21, 2015  |  by Commissioner Brennan

This report was included in the Oct. 21, 2015 Harbor Commission board packet (Item 6).

FIREWALL PURCHASE SPLIT IN HALF

Less than one month after being sworn-in, Commissioner Mattusch inquired about two handwritten checks listed in the Feb. 4, 2015 meeting packet. Harbor District IT and Human Resources Manager Marietta Harris explained that the checks totaling $19,075 were for new “routers” (firewalls).

President Brennan requested follow-up information because the Board had not approved the purchase. On February 10, 2015, Ms. Harris emailed two requisition forms. Palo Alto Networks firewalls and software subscriptions were split on those requisition forms. Acting General Manager Scott Grindy's and Marietta Harris’s signatures were on both. 

The forms listed three servers, however, the words “server” were scribbled out and replaced with the handwritten word “firewall.” President Brennan asked why “servers” had originally been typed on the forms. Ms. Harris said it was a typo and that the District had previously purchased servers from the same vendor.

President Brennan requested the firewall invoice and Ms. Harris responded via email, “We paid from the quote because we were all in the office discussing what we needed and in order to get the discount we wanted to act fast.”

A Sept. 2, 2015 report from Interim General Manager Glenn Lazof, indicated that the IT vendor may have been instructed by District management staff to split the project onto two quotes. By splitting the purchase onto two requisition forms management staff avoided the board authorization requirement on purchases above $15,000.

Two weeks after Commissioner Mattusch's question about the $19,075 payment, at the Feb. 18, 2015 meeting Ms. Harris announced her resignation.

CAUSE FOR CONCERN

On March 30, 2015, President Brennan phoned Acting General Manager Grindy and expressed concern about a meeting held while he was away. Ms. Brennan had observed Finance Director Debra Galarza sharing a draft staff report with a vendor. Ms. Brennan was concerned because the vendor had not yet submitted an estimate to the District and the draft included a $47,000 purchase request. 

Ms. Brennan asked Mr. Grindy if he thought tempting a service provider with an inflated budget number in advance of receiving an estimate was prudent. Mr. Gindy said, “It’s not unusual.”

On May 11, 2015, President Brennan followed up with an email to District Counsel Steven Miller, Interim General Manager Glenn Lazof, and Commissioner Tom Mattusch. The email stated:

On Monday, March 23, 2015, Debra Galarza emailed me and requested a meeting at the 504 Avenue Alhambra building in El Granada. She needed access to the new office space so she could meet with The Well Connected Office (IT vendor) while they performed a site visit in advance of providing the District with an estimate. At the time Debra was acting as General Manager while Scott was away at the Port Captains Conference.

I emailed Randy Kinghorn (the District’s realtor) and asked him to open the building. Randy, Steve Almes, Steve’s employee, Debra and I met at the District’s new headquarters. Steve and his employee checked phone jacks and server rooms, Randy and I looked at the public meeting room related to a new wall that would be installed by the building owner as part of the lease agreement.

Randy left and I waited in the conference room for Steve and Debra to finish. I was writing email on my cell phone when they joined me. Steve and his employee discussed some of the IT possibilities, overall Steve said the building would not require much work because it was set up well from an IT perspective.

Debra handed Steve a draft staff report for the upcoming April 1st meeting and asked Steve if everything looked okay. I asked if I could take a look at the draft. I noticed that $47,000 was recommended for IT services related to moving the District’s headquarters from South San Francisco to El Granada.

THE TAIL OF THE MISSING HARBOR SERVERS

At the April 1, 2015, Board meeting, President Brennan opposed a recommendation by commissioner David to hire the Well Connected Office for IT-related moving costs. A few days later Ms. Brennan learned that the District was not in possession of servers purchased in 2012 from The Well Connected Office.

Ms. Brennan alerted Counsel about the missing servers.

On April 5, 2015, Steve Almes, owner of The Well Connected Office, informed Mr. Grindy that he no longer wished to work for the District.

By reviewing past agendas and board packets, Ms. Brennan was able to confirm that on May 16, 2012, the Board approved spending up to $40,000 on IT equipment. A member of the public, John Ullom, confirmed via PRA request that on May 31, 2012 the District paid the IT contractor $34,689.31 for servers (check #040875).

On May 18, 2015, Deputy Secretary Debbie Nixon provided a formal response letter to PRA requests President Brennan made in March and April 2015. The letter stated, “Yes, the equipment was delivered to the District. We assume the equipment was installed.” The letter was incorrect. The custom servers were never actually built or delivered.

The next day, May 19th, Interim General Manager Lazof sent a memo to District staff stating, “Effective immediately I am directing all staff and contractors to cease any professional contact with Commissioner Brennan, other than at Public Meetings, or as explicitly approved by me or an authorized designee.” On the same day Mr. Lazof also sent a memo to the board accusing President Brennan of harassing him during a phone conversation. Ms. Brennan stated that Mr. Lazof’s untrue and retaliatory allegations were intended to tarnish her credibility.

SHOOT THE MESSENGER

On May 26, 2015, Commissioner Bernardo appeared incensed by the suggestion that management staff might have paid for equipment that was never delivered. He was the Board Treasurer in 2012 and it was his job to review and approve bills in advance of payment.

Commissioner Bernardo said that Ms. Brennan should be removed as Board President because she made past “false allegations” against the District’s IT consultant. Commissioner Bernardo also said, “There is no fraud, there is no theft, no criminality whatsoever.” And he went one step further to suggest that President Brennan’s concerns could have resulted in a lawsuit against the District.

TWO REFUNDS

On August 8, 2015, the Harbor District received a long overdue $34,689.31 refund for servers that were paid for in 2012 but never delivered.

At the Sept. 2, 2015 Harbor District meeting, Marcia Schnapp, the Interim Administrative Manager confirmed that the District had received a refund for the firewalls ($19,075) less a 7% restocking fee. During the meeting Commissioner Brennan requested a copy of the refund check to verify the amount.

To-date the total refund for the firewalls and servers is $52,158.26.

The Sept. 2, 2015 staff report (Item 14) disclosed that IT vendor Steve Almes said that Marietta Harris told him to issue invoices for equipment he had not delivered. During the meeting Interim General Manager Lazof said that staff had not been following the District’s purchasing policies and he detailed a number of accounting errors that were still being resolved. He said that multiple estimates should be requested for equipment and that consultants should be prohibited from purchasing equipment on behalf of the District except in an emergency.

CONCLUSION 

• At the September 4, 2014 Board meeting, the District’s General Manager Peter Grenell announced his retirement. Grenell's last day was Dec. 31, 2014. He managed the district for 17 and a 1/2 years. 
• At the February 18, 2015 Board meeting, the District’s IT and Human Resources Manager Marietta Harris announced her resignation.
• On July 1, 2015, the District adopted Resolution 27-12 to approve an agreement with a new IT vendor. 
• On August 19, 2015, the District’s Interim General Manager Glenn Lazof sent a formal letter to a member of the public, John Ullom, acknowledging his role in recovering a refund for IT equipment that was never delivered to the District.
• On September 4, 2015, the District’s Finance Director Debra Galarza resigned. A contractor is currently filling in as finance director.
• On September 25, 2015, the District's Deputy Secretary Debbie Nixon resigned. A temporary employee was trained to cover the position and is filling in.
• At the October 7, 2015 Board meeting, the Board approved an employment agreement to hire new General Manager Steven McGrath.
• On October 7, 2015, Commissioner Nicole David announced her resignation, citing “health concerns” as the reason for resigning nine months into a four-year term.
• On October 9, 2015, Harbormaster Scott Grindy submitted a letter of resignation. His last day will be Oct. 23, 2015.

Accountability, Culture Shift & Teamwork

The following letter was delivered to the board on Wednesday, Oct. 21, 2015.

Dear President Mattusch and Commissioners,

Over the past few years the Harbor District has experienced financial internal control problems and procurement problems. Tonight my informational report regarding IT equipment, software and support procurement (Item 6) is a reflection of my concerns about the District’s fiscal accountability. My hope is that this report will serve to clear the air on the specific reasons for my concerns. It is my sincere hope that the board and new management will put these problems behind us with improved fiscal oversight, innovative financial transparency tools such as OpenGov, appropriate accounting software, and policy recommendations from the Finance Committee.

Culture Shift

The Harbor District has experienced a rapid culture shift over the past ten months. In January 2015 the board gained two new commissioners, shifting the District in a more open, progressive, and public-friendly direction. The retirement of the past General Manager at the end of 2014 and the relocation of the District’s administrative office back to the Coastside in May 2015 were indications that a transition was unfolding.

General Manager Peter Grenell ran the District for over 17 years. Commissioner Jim Tucker was first appointed in June 1998 and served for almost 17 years. Since their departure in December 2014 the District has experienced significant and sometimes painful culture shift towards a more contemporary form of governance. Past mismanagement left the current board with an astounding number of complex policy issues to clean up, and that process may require years to complete. To their credit the Harbor Patrol has continued to provide excellent service and emergency response while the board and management makes necessary changes. 

Theory of Change 

With change comes creativity, innovation, improved accountability, opportunities to evaluate and define long-term goals, and the need for greater cooperation.

Diversity Balances Biases

The District needs a complementary team – a team in which the members are different from each other, not similar, which means acknowledging the importance of differences in style and opinion. Each person’s style provides a counterpoint to the others. Our differences can provide opportunities to balance naturally biased judgments. Giving consideration to diverse perspectives and thinking critically about the challenges facing the District is a necessary process that builds a solid foundation for strong decision-making. That is teamwork, and is the reason why most governments are multi-member boards.

Trust, Cooperation and Flexibility

To keep the forward momentum the board and management must build trust within the community by being transparent and responsive, setting clear achievable goals, modernizing outdated policies, improving fiscal accountability, and correcting past mismanagement. And to do this we must become nimble.

Daryl Connor, in his 1998 book Leading at the Edge of Chaos, popularized the term “nimble” describing nimble organizations as those with “a sustained ability to quickly and effectively respond to the demands of change while delivering high performance.” Nimble leaders create goals and performance measures which recognize and reward nimbleness—for example, discovering a new way to meet regulatory requirements while also encouraging public participation.

Nimble leaders anticipate the need for adaptability by hiring flexible employees and preparing current employees for continuous change. They constantly push for higher performance, yet recognize that failure is to be expected with innovation. 

Fluid Structure

Nimble leaders create fluid organizational structures that encourage interactions and change to meet new situations and solve new problems. They do not simply move boxes around on the organizational chart, but create structures that encourage collaboration and teamwork.

Implementing Objectives to Meet Goals

Nimble leaders balance near-term objectives and long-term goals. Commissioners and management staff need to look beyond the next election and not lose sight of the bigger picture and long-term goals. While responding to the public’s demands for greater transparency, for example, a nimble leader will also ensure that administrative staff members are receiving training and experience in working with new transparency tools such as OpenGov.

Adapting to Change

Nimble leaders overcome vested interests, legacy systems, and sacred cows by encouraging open communication and creativity.

Proactive vs. Reactive

Nimble leaders are always on the lookout for “bad news,” knowing that finding it before it finds the organization is important in order to respond effectively. They find ways to identify internal problems by encouraging internal critics, rotating personnel and hiring people with new perspectives. They discover problems in service delivery by meeting their customers.

Nimble leaders do not rely on a crisis to force change. Crisis in and of itself is not a powerful impetus for long-term change. If it were, cardiac events would cause heart patients to alter their lifestyles appropriately. Fear does not create change. More often, fear leads to denial and creates a narrative that reframes facts to fit preconceived ideas.

Instead, nimble leaders are proactive so that their agencies respond quickly and effectively to the demands of change.

Simple Plan

The Harbor District needs a simple turnaround plan.

One of the nimble leader’s most important roles is to distill an organization’s many priorities and strategies into a simple plan, so that employees can remember it, internalize it and act on it. With clear goals and metrics, everyone can pull in the same direction, knowing how their work contributes to those goals.

Rules of the Road

In 2015 the Commission adopted board norms and a new culture began to take shape based on three values: respect, integrity, and equality. This is good news because cynicism and politics can metastasize within an organization, and are amplified by public opinion when an agency lacks core values or is not actually living out its code of ethics.

What truly matters is that the District has to live by its values, reinforce them every day and not tolerate behavior that’s at odds with those values. On July 15, 2015 the board unanimously approved the San Mateo County Harbor District Code of Ethics and Values adapted from the 1999 City of Santa Clara code. This was a positive step forward.

New Leadership

The past 10 months has presented numerous challenges for employees, contractors, the public and the Board. The District is in the process of implementing recommendations made by the Civil Grand Jury and LAFCo. And while necessary management changes and policy changes have occurred, more improvement is still needed.

The Harbor Commission is moving in a positive direction, and with Steven McGrath as the new General Manager comes new opportunity. My hope is that the Commission, the new General Manager, and the new administration will work cooperatively, in the best interest of the District and the people we serve. 

Thanks for your consideration,

The following two sources were liberally borrowed from: 

Leading a Nimble Organization  |  Susan Spaddock  |  October 31, 2014

Management Be Nimble  |  Adam Bryant  |  January 4, 2014

The Tale of the Missing Harbor Servers

This is a first draft. For the final report click here.

Less than one month after being sworn-in commissioner Mattusch inquired about two handwritten checks listed in the Feb. 4 meeting packet. IT/HR director Marietta Harris explained that the checks totaling $19,075 were for new “routers” (firewalls).

I requested follow up information because the board had not approved the purchase. Marietta emailed two requisition forms on Feb. 10. Palo Alto Networks firewalls, software, and support subscriptions were split on the requisition forms to avoid the spending limit. Acting general manager Scott Grindy and Marietta's signatures were on both. 

I also noticed that the forms listed three servers however the words "server" were scribbled out and replaced with the handwritten word “firewall.” This piqued my curiosity so I asked why servers had originally been typed on the forms. I was told it was a typo and that we had previously purchased servers from the same vendor.

I requested the firewall invoice and Marietta emailed, “We paid from the quote because we were all in the office discussing what we needed and the quote and in order to get the discount we wanted to act fast.” It occurred to me that the staff might have asked the IT vendor to split the project on two quotes to avoid the required board authorization on purchases above $15,000.

Two weeks after commissioner Mattusch's question about the $19,075 payment Marietta surprised the board by announcing she was resigning at the Feb. 18, 2015 meeting.

Cause for Concern

On March 30, 2015, I phoned Scott Grindy and expressed concern about a meeting held while he was away. I had observed finance director Debra Galarza sharing a draft staff report with a vendor. I was concerned because the vendor had not yet submitted an estimate to the District and the draft included a $47,000 purchase request. 

I asked Scott if he thought tempting a service provider with an inflated budget number in advance of receiving an estimate was prudent. Scott said, “It’s not unusual.”

On May 11, 2015, I followed up with an email to district counsel, interim General Manager Glenn Lazof and commissioner Mattusch. My email said:

On Monday, March 23, 2015, Debra Galarza emailed me and requested a meeting at the 504 Avenue Alhambra building in El Granada. She needed access to the new office space so she could meet with the Well Connected Office (IT vendor) while they performed a site visit in advance of providing the District with an estimate. At the time Debra was acting as General Manager while Scott was away at the Port Captains Conference.

I emailed Randy Kinghorn (the District’s realtor) and asked him to open the building.  Randy, Steve Almes, Steve’s employee, Debra and I met at the District’s new headquarters. Steve and his employee checked phone jacks and server rooms, Randy and I looked at the public meeting room related to a new wall that would be installed by the building owner as part of the lease agreement.

Randy left and I waited in the conference room for Steve and Debra to finish. I was writing email on my cell phone when they joined me.  Steve and his employee discussed some of the IT possibilities, overall Steve said the building would not require much work because it was set up well from an IT perspective.

Debra handed Steve a draft staff report for the upcoming April 1st meeting and asked Steve if everything looked okay. I asked if I could take a look at the draft. I noticed that $47,000 was recommended for IT services related to moving the District’s headquarters from South San Francisco to El Granada.

Servergate

At the April 1, 2015, board meeting I opposed a motion by commissioner David to hire the Well Connected Office for IT related moving costs. A few days later I learned that the District was not in possession of servers purchased in 2012 from the Well Connected Office. I alerted counsel about the missing servers.

On April 5, 2015, Steve Almes owner of the Well Connected Office informed Scott Grindy that he no longer wished to work for the District.

By reading past agendas and board packets I was able to confirm that the Board approved spending up to $40,000 on IT equipment on May, 16, 2012. John Ullom confirmed via PRA request that the District paid the IT contractor $34,689.31 for servers (check #040875) on May 31, 2012.

On May 18, 2015, deputy secretary Debbie Nixon provided a formal response letter to a PRA requests I made in March and April. The letter stated, “Yes, the equipment was delivered to the District. We assume the equipment was installed.” This was odd because the servers had still not been located. At the time I wondered if they might have been recycled or stolen. I did not respond to Debbie’s email and I later learned the custom servers were never actually built or delivered.

The next day on May 19th, Glenn Lazof sent a memo to District staff that said, “Effective immediately I am directing all staff and contractors to cease any professional contact with Commissioner Brennan, other than at Public Meetings, or as explicitly approved by me or an authorized designee.” On the same day Lazof also sent a bizarre memo to the board accusing me of harassing him during a phone conversation. I believe Lazof’s untrue allegations were intended to tarnish my credibility. And his memo to staff was intended to ostracize me and interfere with my ability to do my job by treating me differently than the other commissioners.

Bernardo Shoots the Messenger

Commissioner Bernardo was incensed by the suggestion that our management staff had paid for equipment that was missing and possibly never delivered. He was the board Treasurer in 2012 and it was his job to review and approve bills in advance of payment.

On May 26, 2015, commissioner Bernardo said that I should be removed as board president because I made false allegations against our IT consultant. Bernardo also said, “There is no fraud, there is no theft, no criminality whatsoever.” And he went one step further to suggest that my concerns could have resulted in a lawsuit against the District.

Two Refunds

On August 8, 2015, the Harbor District received a long overdue $34,689.31 refund for servers that were paid for in 2012 but never delivered.

At the Sept. 2, 2015 Harbor District meeting Marcia Schnapp, a past finance director and current interim administrative manager confirmed that the District had received a refund for the firewalls ($19,075) less a 7% restocking fee. During the meeting I requested a copy of the refund check to verify the amount, hopefully I will receive it soon.

To-date the total refund for the firewalls and servers is $52,429.06.

The Sept. 2, 2015 staff report disclosed that IT vendor Steve Almes said that Marietta Harris told him to issue invoices for equipment he had not delivered. During the meeting Glenn Lazof said that staff had not been following the District’s purchasing policies and he detailed a number of accounting errors that were still being resolved. He said that multiple estimates should be requested for equipment and that consultants should be prohibited from purchasing equipment on behalf of the District except in an emergency.

Conclusion

Harbor District general manager Peter Grenell announced his retirement at the Sept. 4, 2014, board meeting. Grenell's last day was Dec. 31, 2014. He managed the district for 17 and a 1/2 years.

The District’s IT and human resources director Marietta Harris announced her resignation at the Feb. 18, 2015 board meeting.

I’m currently serving a four-year term as a Harbor Commissioner that ends in 2016. I resigned as board president at the May 26, 2015 board meeting. 

The District’s finance director Debra Galarza signed a six figure settlement agreement on Sept. 4, 2015, and resigned effective immediately. Galarza threatened but never actually filed a lawsuit against the Harbor District. She did however have a history of numerous complaints against the district that predate my time on the board. It's been alleged online that commissioner Jim Tucker told Galarza to file a tort claim against the district in 2014.  A contractor is currently filling in as finance director.

The District's deputy secretary Debbie Nixon's last day will be Sept. 25, 2015. A temporary employee has been trained to cover the position and will be filling in.

The District has a new IT vendor.

Letter of Appreciation for Recovering $35,000