CEO Report

Brian P. Kelly, CEOJuly 2021
This edition of the CEO Report was delivered by Authority Chief Financial Officer Brian Annis.

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I want to start with an update on the procurement for our Risk Management contractor. As a follow-up to our December conversation on procurement of risk consultant resources, I am happy to report that last month, we completed the competitive procurement process and awarded Ernst & Young the contract — we anticipate a start date in the middle of July. The contract is for a duration of three (3) years and a total value of $4.7 million.

These resources will staff our Risk Management Office in evaluating the current and emerging risks to this organization at the enterprise level and our Project Management Oversight Branch with program and project level oversight of risk management practices at the program level.

The contract will be managed by our Director of Risk Management and Project Controls thus creating a greater independence for risk data gathering, risk analysis, and risk assessments.

The contract includes services for policy and procedures development, facilitating risk workshops, developing a knowledge transfer and change management plan for creating a risk-aware culture, and creating a risk management-training program for Authority personnel.

Once the contractor is on board, we plan to stand up our Enterprise Risk Committee and further the development of our Enterprise Risk Management Program which were also explained in our 2020 Business Plan. These efforts will position the Authority to better identify, understand, document, and mitigate a wide variety of risks across the organization.


As you know the Authority applied for a federal INFRA grant for the Wasco SR-46 Improvement, unfortunately did not receive it – however there is another opportunity for grant funding through the 2021 RAISE grant.

The 2021 RAISE Grant Notice of Funding Opportunity was released on April 23, 2021.

On July 12, the Authority submitted three applications for the following:

  • Updated Wasco SR 46 Improvement Project
  • Fresno Southern Pacific Depot Historic Renovation
  • Palmdale Station Implementation Master Plan

We will continue to keep the board updated when we hear back on these three applications.


In a recent board meeting, we were asked to look into the Authority’s progress on the Small Business Program and the goals that have previously been established and determine whether the Authority’s Small and Disadvantaged Business Program 30% overall goal was reasonable and attainable or consider if it should be modified.

Currently, the Authority has an overall Small Business Program goal of 30% that combines Small Businesses and Disabled Veteran Business Enterprise businesses certified under the state of California, with Disadvantaged Business Enterprises certified by the federal government, each with their own set of requirements.

The challenges the Authority has experienced with the 30-percent overall goal are as follows:

  • Combined State and Federal programs do not align with statutory requirements.
    • The State requires 25-percent Small Business and 3-percent Disabled Veteran Business Enterprise while Federal requires 10-percent.
  • The Authority’s Small Business and Disabled Veteran Business Enterprise participation calculation is inconsistent with other state departments.

The Authority has been working with the Peer Review Group, and the Business Advisory Council to seek feedback on the current program and seek feedback on how we can refine our program. Our goal is to reorganize the Small Business Program structure and allow the team to monitor and manage pre-award expectations with post-award compliance more closely.

Once all information has been compiled and vetted, the Authority will provide the proposed Small Business Program modifications to the Board at an upcoming meeting.


In May, CEO Kelly provided the Board with an update on the status of the Central Valley Segment. He noted that design on all three construction packages was almost complete – CP 1 at 92.5%; CP 2-3 at 91.7% and CP 4 at 100%.  He also advised the Board that with more design complete, we are working with the contractors to get the scope into the contracts which involves negotiating and executing change orders and resolving commercial disputes.  Here is a quick snapshot of where we are on that front:

In CP 1 – two significant change orders were recently finalized.  The first was for water, sewer and storm drain utility work at Golden State Boulevard in Fresno. The Change Order completed amounts to $19,251,944

The second was for access roads for BNSF and UPRR. Both change orders are within the CEO’s delegated authority.  We have several more in negotiation which reflect scope items requested by third parties, including Golden State Boulevard North and South, McKinley Avenue and Belmont Avenue. Total dollar value for that change order was: $24,265,970.

In CP 2/3 we continue to work on commercial settlements. As we continue to make progress on these items, we will keep the board updated.  As always, executed change order information can be found on our website


Starting this month, we’ll begin more formal outreach regarding our next Rail Delivery Partner contract.  As you know, our current contract with WSP concludes next year.  We are currently working though what we expect the new contract scope to look like and expect to gain valuable feedback from industry leaders during this outreach process.

We will be coming back to the board later this fall for a full presentation.


A few heads ups that we’d like to provide regarding our environmental documents.

Next Friday, July 23rd, the Authority will be publishing a Revised Draft Environmental Impact Report/Supplemental Draft Environmental Impact Statement for the San Francisco to San Jose project section. The document will include an alternative design for the Millbrae Station and additional analysis and information related to the Monarch butterfly. The comment period will be open from July 23rd to September 8th and the Northern California team will be hosting a community meeting on August 11th.

Next month, our August meeting will be a two-day Board meeting occurring August 18 and 19. The Board will be presented with staff-recommended actions related to review and approval of the Bakersfield to Palmdale Final Environmental Impact Report/Environmental Impact Statement (EIR/EIS)

The Bakersfield to Palmdale Project Section provides a north-south high-speed rail connection linking the 80-mile stretch between the Central Valley with the Antelope Valley in Northern Los Angeles County, closing the passenger rail gap that currently exists between the two regions.

To support the Board’s preparation for proposed actions on the Bakersfield to Palmdale Project Section Final EIR/EIS at the two-day meeting, CEO Kelly sent the Board a memo about the project, a printed copy of the Executive Summary and an electronic copy of the entire four-volume document on June 24, 2021.

The Bakersfield to Palmdale Final EIR/EIS evaluates four distinct, end-to-end alignment alternatives and two design options near the César E. Chávez National Monument, one station in the City of Palmdale, and a maintenance site and Maintenance of Way Facility located in the City of Lancaster.

The northern end of the project would begin just south of the approved Bakersfield F Street Station. The project would then travel south through the communities of Edison and Keene, and then southeast up and over the Tehachapi Mountains in a series of viaducts and tunnels. The project would then travel past several renewable energy facilities, primarily wind turbines, and natural resource mines and quarries as it descends and passes by the community of Rosamond and the Antelope Valley. The project section would terminate in Palmdale just south of the Palmdale Transportation Center at Spruce Court.

The Draft EIR/EIS for this project section was circulated from February 28, 2020, through April 28, 2020, and the Authority circulated a revised Draft EIR/Supplemental Draft EIS from February 26, 202, through April 12, 2021.  In response to comments received on the Draft and revised Draft documents, the Authority addressed public requests by incorporating revisions and design improvements that reduce or result in no change to environmental impacts and/or costs.

On the first day of the August Board meeting, the Board will receive a detailed staff presentation on the document, hear public comment on the FEIR/FEIS and have an opportunity to ask staff to follow up on any questions they have or that arise during the public comment session.

On the second day of the August Board meeting, staff will respond to all questions and concerns raised by the Board, Legal staff will walk through the requirement of CEQA and NEPA, and the Board will be given the opportunity to take action on the documents.

We will be following up with board members for briefings ahead of this meeting.

That concludes this month’s CEO Report, I’m happy to take any questions.

Relevant Materials:

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