SANDAG cleared in DOJ investigation
FBI investigation appears to have focused, in some part, on SANDAG’s contracts; SANDAG looks to rebuild public trust
COUNTY — A monthslong investigation into contracts at the San Diego Association of Governments has ended with no charges being filed by the FBI, according to a press release from SANDAG.
It is unknown when the FBI began investigating SANDAG, although SANDAG’s performance auditor, Courtney Ruby, notified the Board of Directors on March 29 SANDAG received notification the FBI was looking into contracts. Although contracts were part of the investigation, SANDAG’s statement said the agency did not know the full scope of the investigation.
SANDAG came under fire when former Performance Auditor Mary Khoshamshrab released a scathing investigation into millions of dollars of increased contracts, along with the State Route 125 scandal costing the agency tens of millions of dollars to deploy and then scrap when the toll system was found incorrectly charging motorists.
SANDAG fired the two contractors — HNTB and ETAN Technologies — overseeing the toll system SR 125 and hired Deloitte and A-to-B in a sole-source contract to install a new backend system. Eventually, SANDAG plans to remove the toll system entirely, but is years away from being started, according to previous board discussions.
“SANDAG is pleased to report that it has been notified by the U.S. Attorney’s Office for the Southern District of California and the FBI that the federal investigation has been concluded, and that no federal criminal charges will be filed against the agency or its employees. Although SANDAG was not provided with complete information about the nature and scope of the investigation, we understand that it focused on the contracting activities of SANDAG, and whether those activities had violated federal law.
“Consistent with previous findings by agency management, the Office of the Independent Performance Auditor, and other external audits, substantive improvements are being made to strengthen policies and internal controls, deploy tools and training, and create consistent business practices across the agency.
“These measures will help to ensure that procurement practices are fair and competitive, staff are adequately trained to perform their responsibilities, and that consultant resources are managed in line with contract terms and conditions and established budgets.”
Regarding SR 125, ETAN and HNTB were hired in 2016 with a target date of 2017-18 to deploy toll systems on the highway and Interstate 15. However, problems began during 2017 and the toll for SR 125 wasn’t operational until several years later.
In 2021, it was discovered by a whistleblower SR 125 had faulty equipment resulting in $1.8 million in lost toll revenue over several months. However, the board was never notified of the issues until 2023 thanks to a lawsuit from former SANDAG Finance Director Lauren Warrem.
She was fired in November 2023 for allegedly raising questions and concerns for months to former Chief Executive Officer Hasan Ikhrata and Chief Financial Officer André Douzdjian.
El Cajon Mayor Bill Wells was furious at the lack of transparency from executive staff and withholding operations issues of this scale, while former Encinitas Mayor Tony Kranz was nearly at a loss for words calling those decisions by upper management “suspect,” among expressing other issues.
As for the contracts, Khoshamshrab’s auditor report in 2022 showed a host of issues with the top 30 vendors. Those included missing information, signatures and itemized breakdowns of work performed, along with the “original amount” field left blank in 447 out of 1,627 total contracts, according to a report from The Coast News. Of the 308 on-call contracts, 88% were missing the original dollar amount.
Khoshamshrab’s audit found a $290 million difference between “original amount” and “current amount” totals from 2017-2022. At least seven vendors had percentage swings between 100% and 698%, the report stated.
However, San Marcos Mayor Rebecca Jones, who has been vocal for years over those concerns, said she is relieved the agency and employees were not found in any criminal wrongdoing. She said she is hopeful for the future of the organization, citing the new direction and leadership under new CEO Mario Orso, who was hired away from Caltrans to replace Ikhrata earlier this year.
“There was concern over a lot of things, but we are definitely taking steps to address all the weak areas in the organization,” Jones added. “We are moving forward to address those things. He’s putting us in the right direction. It will depend on the board and its willingness to continue to stay on the same path.”
Jones said Orso and the new executive leadership are addressing concerns over cronyism with contractors and ensuring the agency can re-establish trust with the public. However, Jones said it’s critical for the board, and staff, to scrutinize all contractors to ensure the work is being performed, delivered on time and on budget.
“We cannot continue to spend money on contractors who’ve failed us, and we have to stop that,” Jones said. “We have to take steps to make that happen. It won’t happen overnight. We need to have an open and transparent system. Why continue using the same people when they fail? We should be spending taxpayer money as we do with our own personal money.”
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