The agency in charge of the state's $43 billion high-speed railroad project isn't fully equipped to spend taxpayer dollars and has signed big checks to contractors without checking their work, California's inspector general said Wednesday.
However, the audit from Inspector General Laura Chick also said the California High-Speed Rail Authority is making strides to correct many problems associated with planning the largest public project in the state's history. By 2020, the bullet trains are expected to zip along the Caltrain line from San Francisco to San Jose at speeds of 125 mph on their way to Los Angeles.
Chick, whose job is to unearth wasteful spending of federal stimulus grants, said the agency is improving but still has a long way to go.
The authority has received $2.25 billion in stimulus grants and has $9 billion in voter-approved bonds at its disposal. But Chick's audit concluded the rail authority has not established the plans needed to spend the money.
For instance, the authority does not have a plan to prove the train will run without a taxpayer subsidy, as promised in the bond measure, and hasn't tracked stimulus expenses under a separate account as required by the federal government.
Rail leaders, though, vowed to meet all necessary guidelines before starting construction in 2012.
Chick said she was most disturbed after her team examined a sample of 11 rail authority contracts totaling $9 million. They found the authority paid 38 percent of the funds, or $3.44 million, to contractors without asking for timesheets, work summaries or other documentation to prove how the bill was tabulated.
"That would be equal to you getting a big bill, not knowing what it's for and deciding, 'Well, I'm going to pay for it, anyway,' " Chick said in an interview Wednesday. "Not a good way to spend the public's money."
In a written response, authority CEO Roelof van Ark said the agency now reviews the backup documentation before paying contractors.
Chick also highlighted two other examples of suspect spending from earlier this year.
In one, the authority paid $700,000 to a Southern California engineering firm as part of an oversight contract. But the rail authority was just "paying the bill" and had no oversight over the firm, which actually worked for another local government agency, she said.
In the other case, the authority paid its main contractor, Parsons Brinckerhoff, $90,000 over five months for the company to pay two of its public relations firms. But at the same time, the authority paid its own PR firm more than $1 million, which Chick said amounted to duplication of work.
Van Ark said his leaders no longer sign contracts they can't oversee themselves and have stopped paying the contractor's PR firm.
"Californians should be confident that we will have proper controls in place and use these funds wisely as we build the nation's first high-speed rail system, creating jobs and economic opportunity throughout the state," van Ark said in a statement.
Palo Alto Mayor Pat Burt, whose city recently passed a resolution of "no confidence" in the authority, said the inspector general's analysis is the latest in an "avalanche" of independent criticisms that validate Peninsula cities' concerns with the project.
In addition to a scathing state auditor's report in April, which sparked Chick's investigation, UC Berkeley professors and the state Legislative Analyst's Office, among others, have also been critical of the project.
"It's just so hard to find on what basis to believe that they are credible and capable of managing taxpayer funds," Burt said.
Chick said the report was meant as a "warning shot" and expects to return for follow-up scrutiny before construction starts.
Despite the problems, Chick called herself a "believer" in the project and said the new CEO, who started in June, has helped turn around the agency.
"I think they've brought in a real pit bull," Chick said of van Ark.
Mike Rosenberg covers San Mateo, Burlingame, Belmont and transportation.