Top county executives are under fire from internal auditors regarding no-bid consulting contracts given to a friend of a high-ranking official in the OC Parks Department and intentionally split up to avoid scrutiny from the county Board of Supervisors.
From 2009 until 2014, OC Parks officials authorized 13 consecutive consulting contracts totaling $913,095 to BPM Advisors, which is owned by Ahmad Iqbal, a grad school friend of former OC Parks Deputy Director Michael Brajdic.
In all, four top OC Parks executives -- including Brajdic, Scott Thomas, Doug Berry and then-director (now Chief Operating Officer) Mark Denny -- had a hand in approving the contracts, which were all for amounts under the $100,000 threshold for requiring a vote by the supervisors, according to an Aug. 13 report from the county's Internal Audit Department to County Counsel Nicholas Chrisos obtained by Voice of OC.
The county paid 74 invoices totaling $642,696 to Iqbal's BPM Advisors, which auditors describe as a "one man vendor," before cutting off payments in May. And while auditors stated that they didn’t review the actual work performed, they concluded it would be hard for anyone outside of OC Parks to justify those payouts.
“There was no indication that either BPM or OC Parks prepared any detailed time estimates or associated budgets for any of the stated deliverables or elements identified in the contracts’ scopes of work as a basis for setting the contract award amounts,” auditors wrote in their 23-page report.
Inadequate 'Self Investigation'
While auditors credited current OC Community Resources (OCCR) Director Steve Franks for alerting them to the questionable contracts, they were highly critical of an internal investigation into the matter conducted earlier this year by department officials. That investigation, auditors said, was not adequately conducted and riddled with conflicts of interest.
"The 'Self Investigation' conducted by OCCR and OC Parks lacked the requisite investigatory, fraud and procurement expertise for such a complex manner," the auditors wrote.
The so-called self investigation mirrors the internal probe launched back in 2012 that cleared Carlos Bustamante, a top OC Public Works executive, of sexual abuse allegations from rank and file workers. District Attorney Tony Rackauckas hit Bustamante with a dozen felony sex crime charges after the DA's office reviewed the same complaints.
In this recent case, auditors wrote that internal whistleblowers, who raised the initial questions about the contracts, said their supervisors told them to leave the issue alone. In fact, an internal probe was only launched after a complaint was phoned into departmental human resources officials, according to auditors.
Auditors concluded that it was Brajdic who opened the doors for Iqbal inside OC Parks. Brajdic lobbied hard for BPM Advisors, his experience with Iqbal at Claremont Graduate University's Drucker School of Management gave him confidence
“Mr. Brajdic initiated and continued to strongly support the hiring of Mr. Iqbals’ company, BPM Advisors, LLC as a consultant for OC Parks without following the county’s standard competitive bidding process," the audit states. "Rather, OC Parks repeatedly hired BPM through a non-competitive Cooperative Purchasing Agreement system known as the California Multiple Awards Schedules (CMAS).”
All contracts with BPM Advisors were terminated earlier this year and OCCR referred the matter to internal auditors in April, according to the audit report.
County spokeswoman Jean Pasco confirmed in an email that Brajdic had left the county's employ on March 7 but was unclear regarding the circumstances of his departure.
Both Brajdic and Iqbal refused to be interviewed by auditors.
County CEO Mike Giancola and Denny both declined a request from Voice of OC for interview about the audit report.
When asked about the audit and its conclusions, Pasco would only respond with the following email statement: “The County's policy is to address both work performance and policy compliance issues as soon as they are identified so they are remedied and not repeated.”
Yet auditors questioned whether the internal probe conducted by department heads really addressed any work performance or policy compliance issues.
The internal probes faced the same problem internal human resources officials faced when they were tasked with investigating sexual abuse allegations against Bustamante in 2012. In that case, HR officials who served under Bustamante examined his actions and cleared him.
In this case, OC Parks current Director Stacy Blackwood was asked to delve into the official actions of two of her top bosses – Brajdic and Denny, who took over as COO in 2013.
Denny now oversees the entire county bureaucracy – except for the Registrar of Voters, which was removed from his oversight earlier this year following concerns about his 1996 conviction for voter fraud when he was a political aide to then-Assemblyman Curt Pringle.
Auditors were clearly appalled at the lack of depth of the department's internal investigation.
“OCCR provided IAD (Internal Audit Department) with a four-sentence response and a two-sentence conclusion,” auditors wrote, referring to an April 3, 2014 memo sent to internal auditors with the conclusions of the internal investigation.
The allegations regarding BPM Advisors came to light via a March 6 anonymous call made to an HR Manager that also included allegations against several other employees, the audit stated.
Regarding the BPM issue, Franks’ staff reviewed the half dozen contracts and concluded, “all contract issues to the consultant were executed in compliance with county procurement policies.”
Franks told auditors that Blackwood had reviewed the contracts and “found them to be consistent with the consultants demonstrated educational and professional expertise and supplementary to the business intelligence and business management in-house expertise of OC Parks staff.”
Franks told auditors his department was “comfortable with closing this complaint.”
Auditors were not.
“Internal audit noted 13 actual and possible CPM (Contract Policy Manual) violations and issues associated with the Cooperative Purchasing agreements used for BPM,” the audit states.
The audit went on to state that the “Individual reviewing the contracts for OCCR stated to IAD that she was not an expert on county procurement policies, calling into question the effectiveness of her review of the BPM contracts. She also stated that she had no training in conducting fraud investigations, and in fact did not even realize that she was doing so.”
Auditors wrote strongly worded admonitions against asking someone like Blackwood to investigate her bosses’ actions.
“Any 'self-investigation' that involved a subordinate investigating a superior, particularly high ranking officers of an entity is considered a serious 'conflict of interest' that would disqualify the results as credible in appearance and such warrant 'independent' investigation. The past and current reporting relationship between OCCR and OC Parks and the present County chief Operating Officer present such a conflict,” states the report.
Conflicts of Interest
Auditors also noted: "Former OC Parks Director Mr. Denny was once a direct report to the current OCCR Director, Mr. Franks, while he is now Mr. Franks’ boss and the recently appointed COO. Additionally, there is another conflict of interest to independence in that the OCCR Director assigned the just recently promoted OC Park Director Ms. Blackwood to conduct the critical review of the contracts in question.
"This presents a conflict because at the time of the alleged contract improprieties and transactions the selected reviewer was a subordinate of both the former Deputy Director, Mr. Michael Brajdic, and the former OC Parks Director who is now the COO, Mr. Denny.”
Auditors also noted that departmental employees raised consistent concerns themselves about how the contracts were being rubber-stamped by top officials.
“The OCCR DPA (Deputy Purchasing Agent) further stated that he expressed his concerns to his supervisor regarding the repeated awards of large, non-competitive consulting contracts to BPM through the CMAS process. However, he was told to go forward with their procurement, since the scopes of work in the contracts were different.”
Yet auditors noted that the scopes of work often overlapped and the number of contracts was a mess, leading them to conclude there was an effort to hide what was going on from the board of supervisors.
“OC Parks awarded BPM multiple contracts that overlapped one another and that appeared to be of a related nature. At one point in time, OC Parks had awarded two contracts to BPM, which with extensions, amounted to $555,000. These two contracts were awarded to BPM within one year and ten months of each other. Also two contracts for a total of $475,000 were awarded to BPM within five months of each other,” the report states.
Auditors further concluded, “these facts demonstrate that several of these contracts could have been combined into fewer and consequently larger dollar contracts that would have exceeded the $100,000 Board review threshold.”
In all, auditors concluded executives conspired to keep the contracts secret.
“Nothing submitted to IAD by OC Parks or offered up in interviews with OCCR/OC Parks Management and their DPAs (Deputy Purchasing Agents) disclosed any compelling business justification for repeatedly and without a single exception, setting the dollar award of each of the original CMAS contracts just below the $100,000 threshold, supporting the conclusion that avoiding the Board’s approval threshold was intentional.”
Lastly, auditors warned supervisors that a full countywide review of Cooperative Purchasing Agreements should be conducted to ensure that other departments have not abused the procedure.
Clarification: A previous version of this article gave the impression that county spokeswoman Jean Pasco discussed an Internal Audit Department investigation into contracting at the OC Parks Department. She did not.