Audit Questions DWP’s Handling of Contracts

A preliminary audit released Tuesday calls into question the way the Department of Water and Power handles its contracts, saying the process lacks oversight and might make the utility vulnerable to overbilling by contractors.

The audit, performed by GCAP Services, was of two contracts -- worth about $100 million -- with CH2M Hill, a Denver-based engineering, construction and environmental company.

The DWP hired the company in 1998 and 2000 to help control air pollution in the Owens River Valley.

The audit said that the utility did not follow commonly accepted “best practice” guidelines in developing the contracts or in overseeing the company’s bills.

For example, the audit said, the utility asked the company to do millions of dollars of work that was beyond the scope of the original deal -- without seeking competitive bids first.

The audit also said that there had been little oversight in place to check the company’s billing practices.

But GCAP Services said it had found no evidence of malfeasance on the part of CH2M Hill.

Company spokesman John Corsi said CH2M Hill had done nothing wrong and had abided by the terms of the contract.

“We did not overbill DWP,” he said. “All our charges were appropriate and within the terms of the contract.”

Still, DWP Commissioner David Nahai called the preliminary audit results appalling and said that the utility had forwarded the contracts to the city attorney’s office to see whether it had been billed correctly.

Commissioner Nick Patsaouras said this was not the only contract to be handled without regard for common bidding and oversight practices.

“It’s every contract we have,” Patsaouras said.