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Taxpayers hosed by city airport vendor

Contractor hijacked at least $44,000 of hydrant water

Photo of "unrelated vendor" filling water truck from city hydrant
Photo of "unrelated vendor" filling water truck from city hydrant

An unidentified city contractor has been tapping fire hydrants for an undetermined but substantial amount of free water over more than a decade at Montgomery Field and Brown Field airports says a December 28 report by city auditor Eduardo Luna.

"On May 4, 2017, the Office of the City Auditor received an anonymous Fraud Hotline report alleging that a City vendor for the City’s two general aviation airports has been using water from City hydrants without paying for several years," per the report.

"Our investigation determined that the allegation was substantiated. It also appears that the vendor may have violated the San Diego Municipal Code section regarding use of water from a City fire hydrant."

According to the document, "the City’s contract with the vendor did not require the vendor to pay for the water and City staff directed the vendor to use the water without a meter for approximately ten years at a potential estimated cost of $44,000."

Adds the report, "However, we note that the water rates have not been constant for the past ten years and there is no way to know how much water was actually used."

Making matters worse, "a new contract, which was out for bid during our investigation, did not address water use, and did not include a reference to the City’s Fire Hydrant Meter Program."

Even after a would-be bidder for the new contract noted the lapses, airport officials failed to change the proposed agreement to deal with water costs and usage, says the report.

"Although a different vendor raised the question at a recent pre-bid conference, Airports Division staff did not provide that information to the Purchasing and Contracting Department to be included as an addendum to the contract."

"As of the date of this Fraud Hotline Report, City staff had not included the water use information in the draft amendment to the contract."

Luna's audit cites a city code section saying, "It is unlawful to use City water from a fire hydrant for purposes other than extinguishing a fire without prior authorization from the Department and installation of a fire hydrant meter, regardless of knowledge or intent.”

Additionally, "Use of water from any fire hydrant without a properly issued and installed fire hydrant meter is theft of City property. Customers who use water for unauthorized purposes or without a City of San Diego issued meter will be prosecuted."

As a result of the auditor's findings, the report says, the Public Utilities Customer Support Division will investigate whether "an Administrative Citation or Administrative Warning is warranted based on the information contained in the confidential version of the report and take the appropriate action."

Officials have also vowed to change the terms of pending contracts to address fire hydrants and water usage payment requirements, with an implementation deadline set for June 30, 2018, according to the report.

"Our investigation determined that the vendor’s prior contract did not contain any reference to the City’s Fire Hydrant Meter Program and did not address payment for water use."

In all, says the report, auditors "made four recommendations to hold the vendor accountable, update City’s policy, recover costs, and include payment for water use in the new contract. City management agreed to implement all four recommendations."

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9

Same ole story at the City. No one is held accountable because it’s OPM. Other people’s money.

Since the City has a CEO, our Mayor, and we even have a COO, Chief Operating Officer, Scott Chadwick, who “earned” $319,235.00 in pay and benefits in 2016. Maybe one of them should held responsible and pay for this clearly illegal “gift” of public funds.

Bravo to Mr. Luna and his team for following up on the whistle blower’s tip.

Jan. 1, 2018

Luna is doing his job; that is more than you could have said about some of his predecessors in the position. It seems as if there's a report of Luna finding weak or non-existent controls that resulted in financial losses to the city, every few weeks.

But each time he points something out, it leaves some part of the city bureaucracy with egg on its face because it didn't do everyday, common sense things to avoid the waste and/or fraud involved. This matter is no different. If he keeps up these embarrassments to the rest of the city government, he'll soon find himself out of a job. The mayor is especially trying to look good, and the auditor pointing out that there are many examples of poor management doesn't help Kev-boy at all. It took decades of sloppy governance to allow such mismanagement to flourish, and one dedicated public servant cannot root it all out in a short time. Luna is trying. Let's see if the slobberin' city government will let him continue to reform the operation. I'd not bet on it.

Jan. 2, 2018

The Auditor’s office is not just Luna. There are 22 employees with a budget of more than $3million. The auditor himself, Luna, was hired on a 10 year contract. The city council also passed an ordinance in 2009 making it a crime to interfere or impeade an auditor’s investigation. My only concern is the auditor’s is the slowness of reports. While accuracy and completeness are admiral traits, the Auditor’s own goal #2 states, in part, to provide “timely” information to stakeholders. Sometimes a fire needs to lit under the auditor’s butt to get these reports out and corrective steps taken to end the waste, fraud and abuse quickly. And, “stakeholders” should always include the taxpayers who fund the city.

Will this or another Auditor remain after the initial 10 year contract expires? I certainly hope so. The debacle of the Enron-by-the-Sea era cannot be allowed again. The Golding/McGory/Murphy disasters are still being paid by taxpayers.

Jan. 2, 2018

You seem to imply that the auditor's office is moving too slowly, and you may be right. (Have you ever had to deal with auditors? If you have, you might observe that they never act in haste.) But when Luna and his staff make recommendations, they are just that, recommendations. The city bureaucracy has to implement them, and if there's little or no interest or commitment, nothing may happen. Under the current system, Chadwick ought to see every report from the auditor and give it priority for implementation. As to it now being a crime to interfere with or impede an audit, has anyone ever been charged? I don't recall a case. With the former city attorney, Goldy, in charge of prosecuting such offenses, we can bet that he was most reluctant ever to charge a member of the city government cabal with a crime. The new city attorney? Who knows about her.

Jan. 2, 2018

If the contract with the City did not include paying for water then how is the vendor in violation of anything if he was following the terms of the contract and was using the water in accordance with that contract? Nothing in the article indicates that the vendor was doing anything other than providing service within the confines of the contract. If there is any fault or wrongdoing here it is with the City administration for not addressing the fire hydrant use provisions when they let the bid. The vendor should not be held liable for complying with the contract.

Jan. 2, 2018

The contractor is in violation of the pre existing ordinance for not renting a meter from the Water Department, and you know they knew they needed one.

But you’re correct, the idiot who wrote the terms of the contract in the first place without spelling cleary has created a loophole. Sadly, it’s the City Attorney’s office who reviews ALL contracts that should be held accountable. But as I said before, since it’s other people’s money they are careless with it. Too bad, so sad with a shrug of the shoulders is all we’re going to get for past “gifts” along with a promise to do better.

Jan. 2, 2018

This is the problem with how the city conducts "the people's business"—they always build in accountability escape clauses.

Like the Balboa Park centennial fiasco, although Luna discovered procurement problems, he had to conclude that nothing was wrong, since the contract didn't specify they had to deliver on an actual celebration. It was intended instead to reward Sanders and his cronies, and on that it delivered spectacularly.

In this situation, "Even after a would-be bidder for the new contract noted the lapses, airport officials failed to change the proposed agreement to deal with water costs and usage." The question is: what is the person approving these contracts getting for intentionally crafting such sweetheart deals?

Jan. 2, 2018

The SD County Grand Jury also criticized the centennial project. Nothing happened to those who got exorbitant salaries for basically doing nothing. The DA wouldn't prosecute anyone involved in that theft of taxpayer money.

Jan. 2, 2018

Who is this "Vendor" and what services are they providing?

Jan. 4, 2018

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Photo of "unrelated vendor" filling water truck from city hydrant
Photo of "unrelated vendor" filling water truck from city hydrant

An unidentified city contractor has been tapping fire hydrants for an undetermined but substantial amount of free water over more than a decade at Montgomery Field and Brown Field airports says a December 28 report by city auditor Eduardo Luna.

"On May 4, 2017, the Office of the City Auditor received an anonymous Fraud Hotline report alleging that a City vendor for the City’s two general aviation airports has been using water from City hydrants without paying for several years," per the report.

"Our investigation determined that the allegation was substantiated. It also appears that the vendor may have violated the San Diego Municipal Code section regarding use of water from a City fire hydrant."

According to the document, "the City’s contract with the vendor did not require the vendor to pay for the water and City staff directed the vendor to use the water without a meter for approximately ten years at a potential estimated cost of $44,000."

Adds the report, "However, we note that the water rates have not been constant for the past ten years and there is no way to know how much water was actually used."

Making matters worse, "a new contract, which was out for bid during our investigation, did not address water use, and did not include a reference to the City’s Fire Hydrant Meter Program."

Even after a would-be bidder for the new contract noted the lapses, airport officials failed to change the proposed agreement to deal with water costs and usage, says the report.

"Although a different vendor raised the question at a recent pre-bid conference, Airports Division staff did not provide that information to the Purchasing and Contracting Department to be included as an addendum to the contract."

"As of the date of this Fraud Hotline Report, City staff had not included the water use information in the draft amendment to the contract."

Luna's audit cites a city code section saying, "It is unlawful to use City water from a fire hydrant for purposes other than extinguishing a fire without prior authorization from the Department and installation of a fire hydrant meter, regardless of knowledge or intent.”

Additionally, "Use of water from any fire hydrant without a properly issued and installed fire hydrant meter is theft of City property. Customers who use water for unauthorized purposes or without a City of San Diego issued meter will be prosecuted."

As a result of the auditor's findings, the report says, the Public Utilities Customer Support Division will investigate whether "an Administrative Citation or Administrative Warning is warranted based on the information contained in the confidential version of the report and take the appropriate action."

Officials have also vowed to change the terms of pending contracts to address fire hydrants and water usage payment requirements, with an implementation deadline set for June 30, 2018, according to the report.

"Our investigation determined that the vendor’s prior contract did not contain any reference to the City’s Fire Hydrant Meter Program and did not address payment for water use."

In all, says the report, auditors "made four recommendations to hold the vendor accountable, update City’s policy, recover costs, and include payment for water use in the new contract. City management agreed to implement all four recommendations."

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Comments
9

Same ole story at the City. No one is held accountable because it’s OPM. Other people’s money.

Since the City has a CEO, our Mayor, and we even have a COO, Chief Operating Officer, Scott Chadwick, who “earned” $319,235.00 in pay and benefits in 2016. Maybe one of them should held responsible and pay for this clearly illegal “gift” of public funds.

Bravo to Mr. Luna and his team for following up on the whistle blower’s tip.

Jan. 1, 2018

Luna is doing his job; that is more than you could have said about some of his predecessors in the position. It seems as if there's a report of Luna finding weak or non-existent controls that resulted in financial losses to the city, every few weeks.

But each time he points something out, it leaves some part of the city bureaucracy with egg on its face because it didn't do everyday, common sense things to avoid the waste and/or fraud involved. This matter is no different. If he keeps up these embarrassments to the rest of the city government, he'll soon find himself out of a job. The mayor is especially trying to look good, and the auditor pointing out that there are many examples of poor management doesn't help Kev-boy at all. It took decades of sloppy governance to allow such mismanagement to flourish, and one dedicated public servant cannot root it all out in a short time. Luna is trying. Let's see if the slobberin' city government will let him continue to reform the operation. I'd not bet on it.

Jan. 2, 2018

The Auditor’s office is not just Luna. There are 22 employees with a budget of more than $3million. The auditor himself, Luna, was hired on a 10 year contract. The city council also passed an ordinance in 2009 making it a crime to interfere or impeade an auditor’s investigation. My only concern is the auditor’s is the slowness of reports. While accuracy and completeness are admiral traits, the Auditor’s own goal #2 states, in part, to provide “timely” information to stakeholders. Sometimes a fire needs to lit under the auditor’s butt to get these reports out and corrective steps taken to end the waste, fraud and abuse quickly. And, “stakeholders” should always include the taxpayers who fund the city.

Will this or another Auditor remain after the initial 10 year contract expires? I certainly hope so. The debacle of the Enron-by-the-Sea era cannot be allowed again. The Golding/McGory/Murphy disasters are still being paid by taxpayers.

Jan. 2, 2018

You seem to imply that the auditor's office is moving too slowly, and you may be right. (Have you ever had to deal with auditors? If you have, you might observe that they never act in haste.) But when Luna and his staff make recommendations, they are just that, recommendations. The city bureaucracy has to implement them, and if there's little or no interest or commitment, nothing may happen. Under the current system, Chadwick ought to see every report from the auditor and give it priority for implementation. As to it now being a crime to interfere with or impede an audit, has anyone ever been charged? I don't recall a case. With the former city attorney, Goldy, in charge of prosecuting such offenses, we can bet that he was most reluctant ever to charge a member of the city government cabal with a crime. The new city attorney? Who knows about her.

Jan. 2, 2018

If the contract with the City did not include paying for water then how is the vendor in violation of anything if he was following the terms of the contract and was using the water in accordance with that contract? Nothing in the article indicates that the vendor was doing anything other than providing service within the confines of the contract. If there is any fault or wrongdoing here it is with the City administration for not addressing the fire hydrant use provisions when they let the bid. The vendor should not be held liable for complying with the contract.

Jan. 2, 2018

The contractor is in violation of the pre existing ordinance for not renting a meter from the Water Department, and you know they knew they needed one.

But you’re correct, the idiot who wrote the terms of the contract in the first place without spelling cleary has created a loophole. Sadly, it’s the City Attorney’s office who reviews ALL contracts that should be held accountable. But as I said before, since it’s other people’s money they are careless with it. Too bad, so sad with a shrug of the shoulders is all we’re going to get for past “gifts” along with a promise to do better.

Jan. 2, 2018

This is the problem with how the city conducts "the people's business"—they always build in accountability escape clauses.

Like the Balboa Park centennial fiasco, although Luna discovered procurement problems, he had to conclude that nothing was wrong, since the contract didn't specify they had to deliver on an actual celebration. It was intended instead to reward Sanders and his cronies, and on that it delivered spectacularly.

In this situation, "Even after a would-be bidder for the new contract noted the lapses, airport officials failed to change the proposed agreement to deal with water costs and usage." The question is: what is the person approving these contracts getting for intentionally crafting such sweetheart deals?

Jan. 2, 2018

The SD County Grand Jury also criticized the centennial project. Nothing happened to those who got exorbitant salaries for basically doing nothing. The DA wouldn't prosecute anyone involved in that theft of taxpayer money.

Jan. 2, 2018

Who is this "Vendor" and what services are they providing?

Jan. 4, 2018

Sign in to comment

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