Records: Charlotte had evidence of CATS shortcomings in months-old audits

Why it matters: Three separate audits of CATS completed in the last year identified more than 30 problems the organization is now scrambling to fix, impacting taxpayers and the people who rely on bus and light rail service.

• One of the audits specifically calls out the city for not following through on previous recommendations to do a review of CATS.
• “If this was completed prior, this may not have still been an issue,” the audit read.

Driving the news: The City of Charlotte now expects an off-schedule Federal Transit Administration audit of CATS to examine the agency’s deficiencies. The Metropolitan Transit Commission previously requested the city hire a third-party company to investigate how the organization reached its dysfunctional state, as well as look into a May light rail train derailment.

“This (FTA) review will provide a current state update of all the information being discovered,” read a city statement sent to Axios and WBTV.

• Over the past several months, CATS’ interim CEO Brent Cagle has shared revelations about CATS, which he says he only learned about since stepping into the role. CATS is overdue for the maintenance of light rail vehicles, the replacement of around 100 overage buses, and inspections for light rail bridges and parking garages.
• Cagle has attributed the mounting list of problems to CATS’ “culture of silence.” He indicated that employees were too afraid to speak up about delayed maintenance and other offenses. Three top executives departed the agency in recent months.

Some of the issues that have recently come to light in news reports and city council meetings were already identified in months-old documents. Other problems date back years with no actionable steps taken to fix them. Axios and WBTV reviewed three separate audits of CATS’ practices.

• N.C. Department of Transportation Triennial Audit – 2022
• Federal Transit Administration Triennial Review – 2022
• Grant Thornton COSO CATS Internal Audit Review – 2022

For example, this month, Cagle shared that CATS was sometimes only scheduling one controller in the rail control center at a time instead of two, creating “unsafe working conditions,” according to NCDOT.

• Back in August, NCDOT reported that CATS was frequently operating the rail control center with just one person, according to its personnel schedules. That means a single employee has been managing the movements of both the Blue Line light rail and the Gold Line streetcar at the same time — not to mention both rail yards — for months.

Staffing shortages

In the 2022 audit, NCDOT also noted that CATS had no backup plans for when a controller was absent or for “the assignment of additional” controllers in the case of an emergency response situation.

• Staffing was also an issue for CATS during NCDOT’s 2019 audit.
• Many departments experienced worker shortages last year. Positions were either vacant or frozen, the audit states.

The NCDOT audit found staffing levels in the Rail Operations Control Center “are not adequate.” Follow-up investigations from NCDOT reveal CATS never addressed the problem.

• The insufficient staffing issue was raised again by NCDOT after the train derailment in May — only one controller was on duty at the time of the accident. In April, NCDOT told CATS it must shut down the light rail and streetcar if it cannot adequately staff the rail control center.

Safety

In the NCDOT audit, CATS was also found in violation of not reporting safety events to the state and FTA within the required two-hour window. Of 41 incidents over three years, CATS failed to report six — or 15% — within the timeframe. Leadership told NCDOT it was retraining employees on the procedures.

• A WBTV investigation previously revealed the number of reportable safety incidents investigated by CATS police didn’t match the number reported to the FTA.
• The FTA audit found numerous issues with CATS’ preventative maintenance practices after asking for records for three Blue Line light rail cars and three Gold Line street cars. 

CATS is working to catch up on overdue inspections of its parking garages and light rail bridges, but audits show there were more failures related to inspections. CATS only had documentation to show it inspected 46% of rail vehicles before they went out for service during a week in April and a week in June.

• Also, during the state audit, NCDOT checked behind CATS workers after they inspected grade crossings. The state found defects the city employees had missed. For example, at West Tremont Avenue, vegetation was blocking the view of signals and lights were off aim.

The NCDOT audit recommended that CATS be more forthcoming about safety with the Metropolitan Transit Commission, its policy board. It advised leadership to present to the commission monthly and create a “safety report card.”

• Three days after last year’s derailment, on May 25, the MTC met, but there was no mention of the derailment. City council members said they did not find out about the incident until March — 10 months later.
• “Safety needs to be a standing agenda item at each monthly meeting,” the NCDOT audit states.

CATS contracts

Failures of CATS to properly manage contracts were prominent in multiple audits. Grant Thornton’s review was requested by the city after Charlotte’s internal audit team found contractors were being overpaid.

• WBTV has previously reported on a lack of supplies and equipment resulting in buses staying out of service for months.

The Grant Thornton audit found CATS had a backlog of 142 procurement orders and “3-4 (temporary employees) are needed to work through the existing backlog.”

• The problem was so extensive that Charlotte’s bus operations division, which is run by a contractor, was placing orders and then seeking contract approval after the fact to avoid the backlog and get equipment quickly.
• The audit and other city records show CATS was routinely late paying vendors.

The FTA found problems in almost every contract they reviewed between CATS and an outside contractor.

• For instance, CATS didn’t provide mandatory bus safety testing records for the electric buses it purchased in 2021.

Of note: The contract and procurement problems identified in the audits are indicative of the greatest challenge currently facing CATS.

• For years, CATS budgeted a maintenance overhaul of the Blue Line cars but never executed the contract. Now, the city is working with the manufacturer to get the repairs completed as quickly as possible without interrupting service.

Culture

Since the departure of former CATS CEO John Lewis, city leadership including city manager Marcus Jones has emphasized rebuilding a better culture in the organization.

• The Grant Thornton audit found that many of CATS’ problems were related to a lack of clear structure in the agency that extended to Jones’ office.
• The review found “city-wide organizational charts do not provide clear lines of authority, as well as an uncertain culture.” The first recommendation from the audit requested the city manager’s office to take steps to improve the procurement process and change the culture of the office.

Last year, Jones hired an outside contractor to review the CATS organization. But the audit shows the Grant Thornton team called for the same review more than four years ago.

• “This recommendation is very similar to the one provided by Grant Thornton in the February 2018 report,” the audit reads.

What they’re saying: “While not all work has been done, City CATS leaders have already begun to address some concerns within past audits,” a city statement read.

• For example, the interim CATS CFO is addressing procurement issues, the statement indicates.

“Mr. Cagle has committed to transparency with the community, employees and contractors within CATS,” the statement continues. “Over these last few months, Mr. Cagle has learned a lot and is sharing that information. Mr. Cagle has said before that we may not understand the past CATS leadership thought process, but we must act now with the information we are learning.”