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A new audit reviewing contracts at the\u00a0San Diego Association of Governments<\/a>\u00a0is again raising concerns about the regional planning agency\u2019s leadership, and its in-house watchdog team is accusing management of impeding its work.<\/p>\n Internal auditors say SANDAG\u2019s process of awarding contracts is concerning enough that even after their monthslong review, they\u2019re conducting further investigation and will refer their findings to outside oversight agencies.<\/p>\n With a $1 billion annual budget, the San Diego Association of Governments is a taxpayer-funded planning agency that helps make transportation and other long-term regional decisions.<\/p>\n<\/div>\n<\/div>\n Officials did not specify which matters they will further investigate, nor did they say which agencies they believe should look into the audit further.<\/p>\n The report released late Friday by SANDAG\u2019s\u00a0Office of the Independent Performance Auditor<\/a>\u00a0flagged large contract amendments that lacked board approval, missing and poorly kept paperwork, and millions of dollars in consultant payments for work that auditors argued could have been done by in-house staff.<\/p>\n Mary Khoshmashrab, who has headed the office since 2019, also noted that some members of management \u201cremained unwilling to provide direct access\u201d to certain documents over confidentiality concerns \u2014 a move that hindered the auditors\u2019 work, she said.<\/p>\n SANDAG leaders disputed many of the audit\u2019s findings and believe they \u201cfully cooperated,\u201d according to the agency\u2019s written response. CEO Hasan Ikhrata also said that SANDAG has already improved policies that address some of the auditors\u2019 concerns.<\/p>\n Ikhrata continued: \u201cManagement also wishes to establish that, even if it does not agree with portions of the audit or the way some elements are described, it is supportive and appreciative of many of the recommendations to the extent they provide opportunities for enhancements to SANDAG\u2019s business operations.\u201d<\/p>\n Internal auditors said their findings open the agency and its more than $1 billion budget to serious potential risks: Among them are unanticipated cost increases, collusion between staff and contractors, and losing federal grants due to noncompliance.<\/p>\n Like a previous audit that looked into the agency\u2019s contracts, the latest report again does not identify the vendors.<\/p>\n Khoshmashrab said because of the obstacles her office faced during the audit, staff were unable to perform sufficient testing and opted against making statements regarding whether fraud existed.<\/p>\n \u201cHowever, auditors can state that based on the testing that auditors were able to perform, auditors found no indication of intentional wrongdoing or fraud by staff,\u201d she wrote in her report.<\/p>\n But they did raise concerns about some vendor practices. In one project involving SANDAG\u2019s toll operations systems, a contractor \u2014 a services firm identified as \u201cVendor AA\u201d \u2014 was awarded more money because another company it was overseeing \u2014 described as \u201cVendor EE\u201d \u2014 didn\u2019t do its job on time.<\/p>\n Vendor EE was supposed to complete its work in 2019, but its task order has been extended by four years to 2023 \u201cdue to failure to perform.\u201d As a result, Vendor AA has seen eight cost changes increasing the value of its contract.<\/p>\n Auditors warned that using consultants to perform project management duties created a possible conflict of interest: Vendor AA has a financial incentive, they said, to allow delays and recommend extensions.<\/p>\n SANDAG staff had also failed to conduct regular performance evaluations of the work, which has yet to be completed.<\/p>\n Among auditors\u2019 other findings:<\/p>\n This audit follows others that have embroiled the agency in recent years. Khoshmashrab has also issued reports detailing improper severance payments and\u00a0misuse of agency-issued credit cards<\/a>.<\/p>\n Her office already\u00a0flagged vendor contracts<\/a>\u00a0in October, when auditors found SANDAG increased awarded amounts by tens of millions of dollars with little documentation and poor oversight.<\/p>\n The agency\u2019s 10 vendors with the highest percentage changes were originally awarded nearly $48 million in work \u2014 and that total more than doubled over four years to almost $106 million.<\/p>\nWhy this matters<\/h3>\n
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