FEMA may want Paso Robles earthquake monies returned
October 13, 2011
By KAREN VELIE
The city of Paso Robles is getting a double wave of bad financial news — not only is the city already facing a $2.1 million budget shortfall, but the feds may be looking for the return of more than $1 million in disaster relief money.
Nearly eight years after the San Simeon Earthquake caused a sulfur springs to erupt in the City Hall parking lot, the Office of the Inspector General (OIG) is recommending that the Federal Emergency Management Agency (FEMA) ask the city to return $1.1 million in relief funds.
The OIG recently completed an audit of four large projects and two small projects resulting from the earthquake, totaling $5.8 million. Federal inspectors concluded that the city did not get competitive bids, and as a result overpaid a local engineering firm for design and engineering work.
“City officials awarded these contracts non-competitively to the same contractor they employed before the disaster,” the OIG says in their Sept. 13 audit report. “Full and open competition increases the opportunity for obtaining reasonable pricing from the most qualified contractors and allows the opportunity for minority firms, women’s business enterprises, and labor surplus area firms to participate in federally funded work.
“In addition, full and open competition helps discourage and prevent favoritism, collusion, fraud, waste, and abuse.”
City officials signed a contract with Michael Nunley of Boyle Engineering to provide design and engineering services through Boyle Engineering, Wallace Engineering and Furgo West. City officials claim they selected Boyle Engineering in full compliance with federal and state laws.
“The City acted in full consistency with federal and state rules, the city’s purchasing procedures, and in close consultation and agreement with both CalEMA and FEMA officials,” said Meg Williamson, Paso Robles assistant city manager.
Nevertheless, FEMA requires that contracts must be of “reasonable cost and must comply with federal, state, and local procurement standards.” FEMA rules say engineering and design services should run no more than 12.4 percent of construction costs.
City officials shelled out as much as 63 percent of construction costs for engineering and design.
In addition to questioning approximately $1 million for non-bid engineering work, the OIG wants $100,000 back for ineligible work and unsupported costs.
The OIG is recommending FEMA ask for $43,125 in construction management costs for library improvements to be returned because it was not part of “the approved scope of work.” City officials disagreed with the OIG investigators finding, but said they understood its position, the report says.
However, city officials agreed with the auditor that $51,882 in unsupported costs the OIG says occurred because of accounting errors and additional funds paid to an engineering firm without any details of the charges relating to disaster work should be returned, the report says.
FEMA has until Dec. 12 to provide a written response to the OIG’s audit. If FEMA agrees with the OIG that $1,110,952 in relief funds should be returned, the city will be provided a chance to respond.
“The city will have the opportunity to respond formally to FEMA before any determination is made by them,” Willamson said. “The city will work through CalEMA to respond, if necessary, to the audit findings.”