Image Credit: Tristan Loper, CC By SA 4.0
(North County Beat) – San Diego Mayor Todd Gloria and his administration have been found to routinely violate city contracting regulations, according to a new audit. The report by City Auditor Andy Hanau revealed that city officials altered spending limits without City Council approval and sought consent for millions of dollars in additional work long after it was required.
The audit, spanning 50 pages, highlighted numerous instances of incomplete and inaccurate information in city contracts and identified unwritten policies that led to inefficiencies and staff errors.
“Contract administration roles and responsibilities are not well-defined, and the city lacks a formalized contract alteration process,” the audit stated. It noted that 42% of contract changes, amounting to $155 million, were presented to the council retroactively, in an untimely manner, or not at all.
Conducted over several months and released in late July, the audit provided numerous recommendations to enhance the city’s contracting practices. These practices guide the spending of hundreds of millions of dollars on public contracts each year. The city’s Purchasing and Contracting Department officials agreed with the audit’s findings and committed to implementing the recommendations, though some fixes could take a year or longer to be realized. Despite auditors issuing four similar reports since 2015, many previous recommendations remain unimplemented.
“While the city has implemented many of the associated recommendations, there are still several outstanding recommendations related to these reports,” Hanau wrote. He emphasized that eight of these unresolved recommendations pertain to unclear responsibilities, the necessity for written policies, and the need for improved internal controls.
Past audits also revealed similar violations, with a 2019 report identifying wrongful approval of millions of dollars in contracts. Claudia C. Abarca, the Purchasing and Contracting Department director, acknowledged the latest findings and vowed to implement the Auditor’s Office recommendations swiftly. “Effective contract management is vital for maintaining high standards of service delivery, infrastructure development, transparency, and accountability,” she stated in her formal audit response.
The audit found that city officials under both Gloria and his predecessor Kevin Faulconer failed to obtain council approval for nearly $15 million in contract changes since 2017, constituting 13% of all amendments. Most unapproved contract alterations exceeded $200,000, the threshold requiring council approval.
For instance, a three-year, $1.6 million contract from 2017 for water treatment and supply equipment was increased to $3 million in 2020 without council approval. Another case involved an equipment rental contract initially approved at $14 million, which was later amended to over $18 million and then further increased by $6.7 million without council consent. Eventually, the council approved the contract increase to $32.5 million four months later.
Auditors attributed the failure to secure council approval to confusion over the rules. They noted that staff relied on their department’s deputy city attorney for interpretations, which varied depending on the attorney consulted. The City Attorney’s Office admitted that the municipal code section in question contained several unclear terms, complicating full compliance and potentially necessitating clarifying amendments.
The recurring code violations impede the city’s ability to manage resources effectively. “Council’s review of contracts is an essential function of oversight and preserves the balance of power within the city’s government,” the report stated. It also pointed out that bypassing council approval deviates from city rules meant to ensure public transparency.
The audit put forth 13 recommendations to address these issues. Key fixes include retroactively bringing unapproved active contract alterations to the council, developing a template for council ratifications, providing council updates, and creating a policy for electronically storing and managing contracts. Additionally, the municipal code should be amended to clarify the council’s approval rules.
Abarca provided several timelines for implementing the recommendations, with some changes expected before the end of the year and others by the end of next year. However, a few proposed remedies did not have a specified timeline.
