High desert water treatment authority mismanaged millions in federal funds, audit says

A wastewater treatment authority that serves large parts of the high desert, including Victorville, Hesperia and Apple Valley, mismanaged millions of dollars in federal emergency management funds, a U.S. audit has found.

The Victor Valley Water Reclamation Authority, which received the funds after major flooding six years ago led to a ruptured pipeline, did not comply with numerous federal regulations on Federal Emergency Management Agency contracts worth $31.7 million, according to the report by the Office of Inspector General of the Department of Homeland Security.

The audit calls on FEMA and California to disallow the $31.7 million in what it deemed “ineligible costs� and said further investigation needed to be done to determine “whether additional regulatory and ethical violations or gross mismanagement occurred.�

The inspector general’s office also found that the authority and one of its main contractors misled FEMA to fund more expensive repairs than necessary. That resulted in millions in federal funds awarded to the agency, the report says.

The office promised to present findings on that issue in another report.

David Wylie, a spokesman for the water reclamation authority known as VVWRA, said that officials were “disappointed� by the report and that the agency had “responded in detail to the concerns raised by� the inspector general.

The authority has previously undergone “a lengthy audit process and [provided] substantial legal authority and documentation as to why VVWRA believes that the findings� are incorrect, Wylie said.

According to the current audit, the authority repeatedly accepted, without verification, contractors’ own assessments of costs and need for funds. One contractor’s numerous modifications led the original price of its contract to triple from about $410,000 to $1.3 million, the report says.

The authority also failed to properly follow policy for how contractors should be selected, analyze bids to ensure reasonable costs and impose price ceilings on contractors.

Because the agency did not follow numerous rules meant to ensure that federal grant money is used properly, “FEMA has no assurance that these costs were reasonable,� the report says.

The money was awarded to the authority to repair a pipeline that was washed out by the Mojave River in major floods in late 2010. The rupture sent 42 million gallons of sewage spilling into the river, officials said.

The pipeline project was completed last year.

The audit isn’t the first sign of trouble at the agency.

In April of last year, the city of Victorville gave official notice that it would be leaving the authority because of what it said was “poor management of funds,� said city spokeswoman Sue Jones.

However, the agreement requires 30 years’ notice before participation can be terminated. So the city remains part of the authority.

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