California wastewater authority mismanaged $32mn in FEMA funds – govt audit
The Victor Valley Water Reclamation Authority's (VVWRA) mismanagement has to do with three Federal Emergency Management Agency (FEMA) contracts totaling $31.7 million, in which the agency was found to have not complied with numerous regulations.
A report by the Office of Inspector General of the Department of Homeland Security, which conducted the audit, states that the mismanagement has led FEMA to have “no assurance that these costs were reasonable or that the authority selected the most qualified contractors.”
Among other violations, the report notes that the VVWRA did not perform cost/price analyses of bid proposals to ensure fair and reasonable costs, follow its own procurement policy and federal regulations when evaluating and selecting contractors, or maintain an adequate contract administration system that included careful review of invoices.
“The authority also did not properly account for contract costs. Federal regulations and FEMA guidelines require sub-grantees to account for costs by project. However, the Authority did not issue separate purchase orders to segregate costs for different FEMA projects, nor require its contractors to code the costs on a project-by-project basis,” the report states.
A specific case is mentioned in which one contractor's modifications led the original price of a contract to triple from $410,000 to $1.3 million.
“Thus, we question as ineligible $31,713,569 of the funds,” the report states, also noting that further investigation is needed to determine “whether additional regulatory and ethical violations or gross mismanagement occurred.”
The document notes that the state of California informed the VVWRA of some of the issues in early 2013, but that the agency did not take proper steps to correct the deficiencies.
In addition, the inspector general's office also found that the VVWRA and one of its main contractors misled FEMA to fund more extensive repairs than necessary, resulting in millions in federal funds awarded to the agency. The office wrote that it will present those findings in a separate report.
The report also includes FEMA's response to the findings, in which it states that it concurs with the inspector general's office's recommendations to “disallow” the funds.
VVWRA spokesman David Wylie said that officials are “disappointed” by the report and that the agency had “responded in detail to the concerns” raised by the inspector general's office, The Los Angeles Times reported.
He went on to state that the Victorsville, California-based VVWRA underwent a “lengthy audit process and [provided] substantial legal authority and documentation as to why the VVWRA believes that the findings” are incorrect.
The money was awarded to the VVWRA to repair a pipeline that was washed out by the Mojave River by severe floods in late 2010, which officials say sent 42 million gallons of sewage spilling into the river. The project was completed last year.
It's not the first time that the VVWRA has been accused of mismanaging funds. In April 2016, the city of Victorville gave official notice that it would be leaving the authority due to “poor management of funds,” city spokeswoman Sue Jones said at the time. However, the agreement between the two parties requires a 30-year notice for participation to be terminated. As such, the city remains part of the authority.
In addition to Victorville, the VVWRA serves the cities of Hesperia and Apple Valley, which are located in the High Desert northeast of Los Angeles.