REGION — The first of a two-part contracts audit report was released today by the Office of the Independent Performance Auditor for the San Diego Association of Governments, raising questions over the agency’s handling of hundreds of millions of dollars in on-call and sole-source contracts.
The regional agency’s audit committee met on Oct. 14 to review and discuss the findings of an internal audit analyzing 30 vendors and their contract awards between July 1, 2017, and July 1, 2022.
According to the report by Independent Auditor Mary Khoshamshrab, vendor contracts during this timeframe were frequently missing information, signatures and itemized breakdowns of work performed.
The audit also found the “original amount” field was left blank in 447 out of 1,627 total contracts — meaning no dollar amount was assigned to the contracts. Of 308 on-call contracts (only pay for services as needed), nearly 88% were missing an original dollar amount.
The auditors analyzed which vendors had the largest increases (in both dollars and percentage) between their “original amount” and “current amount.” The report defines the “current amount” as the maximum potential payment to contractors over the course of their contract, not the actual paid amounts.
For contracts with both “original amount” and “current amount” fields entered, there was at least a $290 million differential between totals. At least seven vendors’ contract amounts had percentage swings ranging from 100% up to 698%.
The tables above depict contractors with the 10 highest percentage changes between original and current amounts awarded in their contracts. Photos courtesy of SANDAG’s Contract Audit report
For example, Vendor A’s “original amount” was for $4.5 million and the “current amount” is $25.3 million for “services” — a 459% increase. Vendor B’s contract total jumped from $2.8 million to $11.1 million. Vendor P’s contract award spiked 698% from $1.2 million to $10.2 million.
Vendor Z saw the largest dollar amount increase after its original and current amounts ballooned from $140 million to $204 million, an increase of $63.9 million. However, the total percentage increase from the original to current amounts for all contracts (not including those with blanks in the “original amount” line) is just 5%.
None of the vendors, ranging from construction services to public agencies, were identified in the report.
For all contracts, the original amounts were $576,458,824, and the current amounts total $867,334,056 — a total difference of $290,875,232.
Major areas of concern
The report also states control measures, correct reporting and subverting the open-bidding process were identified as major areas of concern. The audit also found inadequate administrative standard operating procedures for both contract analysts and project managers. Neither have step-by-step instruction and the procurement manual has conflicting and outdated policies and tasks.
Other findings include insufficient training of contract analysts and requirements to be a project manager; an itemized breakdown of work performed not required for invoice payment; an inadequate contract management system (CMS) and inaccurate and missing information; inadequate information for sole-sourced transactions; and material weakness with the identification of on-call and sole-source contracts and amendments.
The second part of the audit, which won’t be released for several more weeks, will analyze if solicitations are sufficiently advertised, requirements and documents are adequate, procurements are completed through full and open competition, proposals and bids are evaluated fairly and whether sole-source contracts are justified and meet requirements.