A new investigation from county auditors found the Orange County Power Authority failed to properly put contracts out to bid and justify why they were working with certain contractors.
This report comes just days after the Voice of OC obtained another report from the county questioning the authority’s work, pointing to a series of problems with how they communicated with the public and showing a series of issues where staff failed to follow best practices.
In a statement to Voice of OC, power authority staff argued that they were subject to less restrictions than the county and pointed out that they recently lowered their prices for customers.
“Findings are subjective – and no laws or statues have been violated,” staff wrote. “OCPA is operating appropriately, transparently and in the best interests of its customers.”
Both audits were commissioned by Orange County Supervisors in August following a grand jury report questioning the power authority’s transparency titled “Orange County Power Authority: Come Clean.”
When Supervisors pushed for the audits, they said they wanted to examine the agency’s finances and get a full look at what they were in for after joining the cities of Buena Park, Fullerton, Huntington Beach and Irvine in an effort to get more clean power for residents who wanted it.
According to this new report from the OC’s Internal Audit Department, that didn’t happen.
“OCPA did not provide us the documentation necessary to evaluate whether controls over the disbursements and human resources processes were adequate,” auditors wrote.
While the first audit – conducted by contracted investigators – focused on the agency’s failure to communicate with the public and follow best practices, the county’s internal one focused on how the agency handles money and found some critical issues with their contracting process and more transparency issues.
To review a copy of the audit, click here.
Where Are the Records?
Auditors say the agency refused to turn over records on 96% of the agency’s expenditures, citing that they contained “sensitive market information,” and also blocked them from accessing personnel records.
One of the largest problems the report focused on was that the agency’s CEO Brian Probolsky has the power to issue contracts up to $125,000 on his own while ignoring the agency’s contracting regulations as long as he informs board members at the next meeting.
None of the 11 unspecified contracts that fell within Probolsky’s spending limit reviewed by the auditors were disclosed to the board, states the report.
“This provision gives the CEO subjective discretion to procure services bypassing OCPA’s purchasing requirements,” auditors wrote. “OCPA should reduce the dollar threshold required for formal solicitations and remove the provisions that allow the CEO to bypass existing OCPA purchasing requirements.”
County auditors found a series of issues with the contracts reviewed:
- One was valued at over $125,000 and had no documented bidding process.
- Two contracts over $125,000 had no paperwork to show why the agency ultimately selected the final bidder.
- Three contracts that were worth less than $125,000 had no documentation to show there was any effort made to find more than one vendor.
- Two contracts were priced at $125,000, exactly the amount Probolsky could approve on his own, but were both for strategic marketing services, and showed no documentation on why those vendors were chosen.
“To ensure OCPA enters into contracts with the most qualified and cost-effective vendors, OCPA should ensure contracts are competitively bid … and contracts are not split to circumvent existing OCPA Board approval requirements,” auditors wrote.
Auditors also noted that 78% of the contracts they had a chance to review “did not have adequate costing/pricing details in the contract.”
The report noted that agency staff would not turn over records to show the agency’s hiring practices, and that one employee was given a 7% merit pay raise after just six months of employment.
A list of contracts provided by the investigators also showed that the agency spent over $1.2 million on “strategic marketing,” contracts in the past year, in a campaign some of their own board members say failed to inform the public about the agency’s rollout.
Fullerton Mayor Fred Jung, who serves as vice chair on the agency’s board, said they “obviously,” failed to properly inform the public during the rollout in an interview with Voice of OC.
“There was so much misinformation, we weren’t countering it fast enough,” Jung said. “When there’s empty space, somebody fills it.”
The report also offered the first estimate for how much the county could have to pay to leave the agency – $65 million, despite never receiving a kilowatt from the program, with launch plans set for the end of next year.
However, that estimate does not include any mitigation measures by the agency that could “dramatically,” lower the final cost, a step the agency is required to take.
County supervisor Katrina Foley, one of the leading voices who called for the audits, said the audit showed a “poorly operated and dysfunctional power authority.”
“It’s disappointing because I know there were so many residents and community activists who really care about clean energy who had high hopes for this,” Foley said. “It’s so disappointing it got taken over by people who aren’t doing a good job.”
There are still ongoing audits from the state auditor’s office and the city of Irvine.
The county is set to discuss their future in the agency at their Dec. 20 meeting, and if they pull out they will officially leave in July 2023.
Reporter Nick Gerda contributed to this story.
Noah Biesiada is a Voice of OC reporter and corps member with Report for America, a Groundtruth initiative. Contact him at email@example.com or on Twitter @NBiesiada.