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Business & Tech

State Audit Blasts High-Speed Rail Authority

$3M spent without proper documentation and other questionable expenses.

The California High-Speed Rail Authority spent millions without proper documentation and even paid double on public outreach efforts, according to the state Office of the Inspector General.

In a report released Wednesday and addressed to Gov. Arnold Schwarzenegger, Inspector General Laura Chick estimated that out of about $9 million in payments she reviewed, roughly 38 percent, or $3.44 million, did not have adequate documentation from the contractors working for the  authority.

Although the authority eventually backtracked during the audit and provided the paperwork, Chick initially found payments that showed no record of  deliverables, time sheets, progress reports or tasks performed.   

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Auditors also found that the authority spent $90,000 on possibly identical public outreach efforts and has also retained a $700,000 consultant who works for the Gateway Cities Council of Governments, not for the authority.

The duplicate payments spanned a five-month period starting in February, after the authority signed a 4.5-year, $9 million contract with Ogilvy Public Relations.

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Despite the new partnership, the authority continued to pay two consultants their maximum retainer fee during the overlap period, which eventually reached $90,000.

"The invoices simply billed for the exact same amount each month, with no details given on work performed," Chick stated in the report. 

Although Palo Alto Mayor Pat Burt hadn't seen the report before an interview, he said the issues it exposed came as no surprise.

"It's just affirmation of why Palo Alto voted to have no confidence in the High-Speed Rail Authority," Burt said. "We just keep seeing an avalanche of problems that make it very hard for an objective party to have confidence in this organization."

The audit covered the period ending July 30 and also analyzed the authority's progress toward implementing 10 recommendations made by the California State Bureau of Audits in March. Chick found that the authority has made significant progress but has not finished the process.

The recommendations included creating a better invoice system, setting up a long-term expenditure plan and creating separate budgets for each leg of the rail corridor between Anaheim and San Francisco.

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