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7A Page 56 ATTACHMENT 2 Comment #24 Page 12 - 'TBWMA J- Dlle Diligence Process" section The Grand Jury report states: 'The Grand ]my learned that SBR planned to rnn the Shorewt9 Facility as a 'satellite' operation from its headquarters in Us Angeles. At what point the SBWMA discovered fhirjact is not clear to the Grand ] ury. SBR expectJ' to receive additional funds annuallY from SB WLY.lA beea//se of its "m;st'alculations and omissions. " The Grand] ury has learned, subsequent to SBR's selection as S horeway Operations Contra(,'tor, that it renegotiated, on Mqy 19, 2009, to tkcrease its reryding revenue guarantee to 16.75 mil1ion. However, SBWA1A is still in deliberations with SBR and has not established afinal amount to operate the S horewqy Facility. SBR proposed that the executive and fmancial management of Shoreway would be directed fom1 their headquarters and that all operations management functions would be completed by local Shoreway-based n'lanagers. While the type of management structure proposed by SBR is not unusual in municipal proposals, it was deemed inappropriate for the Shoreway operation and was rejected by SBW1-1A. The SBWlv1A directed SBR to add the cost of local executive management to their cost proposal. Comment #25 Page 12 - '~BWMA J- Due Diligellce Process" section Tbe Grand Jury report states: 'Vn March 29, 2009, HBC wrote a letter to the SBJf"i\1A contesthzg its basis ftr the selection of SBR (see Attachment 1)" The referenced letter was written by a competitor/proposer that was not recommended to receive the contract. 'Ibe letter contained no new information, and nothing that had not been made public in the Evaluation and Selection Committee reports. Each of the competitor's points had already been fully investigated, analyzed, evaluated and were already reflected in the scoring of the proposals. The SBW~ prepared and transmitted a full response to the competitor/proposer's letter. Comment #26 Page 12 - '~BWMA j- Dill Diligence Process" section The Grand Jury report states: AdditionallY, the Grand] Hry learned from different sources that there is concern about ongoing problems with Community Reryclin~ Olle ~f thc two SBR partners. The Local Enforcement Agenry ftr Los Angeles has issuedjorty-two outstanding l'\Jotices qfViolation.r to Community &rycling Srm T/aUey ReryclifJg and Tran{{er operations. Twenty-six of the violations COllcern permitting. Community Rerycling is operating without the correct permit. The other sixteen violations are for vector, bird and animal control,' training,/ hazardous, liquid, or special waste containment,- scavenging; traffic control; dcaning; reporting; and load checking. In addition, on Febrnary 26} 2009, during a SBWl\1A Board meetin~ a member of the Teamsters Union distributed a letter from Teamster's ucal396 of Southern California. The letter stated the union had rm,!jor labor problems' and 'horrible working conditions' with Community RefYcling. SBR claims if has good union relationships. n Each of the points listed in this paragraph were fully investigated, analyzed, evaluated, by the Evaluation and Selection Committees and reflected in the scoring of the proposals. All of the SBWMA Grand Jury Response_Addendum 2.doc Page 15 of17