State Audit Report Assails Governor on Toxic Dumps

SACRAMENTO â€”  The state auditor general, responding to an audit request by Gov. George Deukmejian, issued a scathing report Thursday on the governor’s toxics cleanup efforts, charging that the Administration failed to comply with government contracting laws and may have made $2.4 million in unneeded payments for work at a major dump site.

The critical audit from Auditor General Thomas W. Hayes, who works for the Democrat-dominated Legislature, comes at a time when the Republican governor is under attack from political opponents for his performance on cleaning up hazardous waste.

Without disputing Hayes’ findings, Deukmejian reminded reporters at a Los Angeles press conference Thursday that he had asked for the report. He made the request last November, two days after The Times reported that the FBI was probing the state’s contracting practices at several federal Superfund cleanup sites.

On Thursday, Deukmejian said a new team installed to run the state Department of Health Services’ toxics program had already begun to implement many of the auditors’ recommendations.

Hoping to put the best light on the critical report, the governor said that “while there have been some difficulties in the way the contracts have been administered, they (the auditors) found that there was nothing done that was either unethical or illegal.�

Democratic Assembly Speaker Willie Brown of San Francisco, long an outspoken critic of Deukmejian’s record on toxics cleanup, said the governor “should be appalled� by the auditor general’s report.

The report concludes that after more than three years in office, the Deukmejian Administration has just begun taking steps to ensure that the state is paying private contractors only for cleanup work actually performed.

Although similar in part to a study by auditors from the U.S. Environmental Protection Agency that was released last summer, the new state findings go even farther, accusing the state Department of Health Services’ toxics division of failing to improve its management of cleanup contracts even after the federal auditors issued a blistering critique of contracting procedures.

Specifically, Hayes contended that the state had incurred “at least $1.4 million in questionable or unreasonable costs� and $1 million in unnecessary delay costs at the McColl dump site in Fullerton.

Speaker Brown commented, “In my book, paying a contractor $1 million to stand by and do nothing for five months is both illegal and unethical.�

Call for Detailed Review

The auditors found instances where the prime cleanup contractor at the McColl dump, Canonie Engineers Inc., appeared to be billing twice for the same equipment and services. Hayes called for the state toxics unit to conduct a detailed review of the billings at McColl in the hope of recovering some or all of the excessive payments.

But in an interview, Hayes raised doubts about the chances of recovery, “because the contracts (between the state and cleanup firms) are written so poorly--they are an attorney’s dream and subject to some dispute.� In late February, as a result of the latest audit, the department stopped a $556,000 payment that would have gone to Canonie for work at McColl.

Many of the problems at that site, an abandoned dump covered by a golf course in a residential neighborhood, resulted from a series of federal EPA actions and court orders last year that stopped the proposed $21.5-million cleanup before any contaminated dirt could be moved.

The auditors noted that the state could have saved $1 million by promptly canceling its contracts at the McColl dump on June 1, 1985--the day after a court ruling halted work at the site until the department completed an environmental impact report on the effects of the cleanup. The contracts were finally terminated in November.

Needed More Time

In their response to the auditors, Department of Health Services officials argued that they needed additional time to consider several options, including an appeal of the court order.

The auditors’ report also challenged the payment of $910,000 in damages to Canonie--$91,000 a month for 10 months to cover “home office expenses� during a period when little work was done at the site.

The company also charged the state $397,000 for equipment and payroll costs that were apparently covered by earlier payments, the auditors said. The items included $180,000 for a bulldozer and backhoe and $116,000 for an air enclosure--a giant bubble used to cover the excavation site to keep noxious fumes from drifting toward nearby homes.

In addition, the report disputed a $112,500 payment made to Crosby and Overton Inc. for delay costs under a subcontract for hauling dirt from the site.

Omitted Precise Costs

The report did not put precise dollar figures on a number of other potentially costly problems the auditors identified in their investigation.

The auditing team contended, for example, that a new system for awarding as much as $90 million in toxics cleanup contracts is badly flawed and resulted in giving contracts in some cases to the least qualified firms bidding the highest amounts.

The auditors found a number of instances where eager state officials, in violation of government regulations, authorized cleanup work to begin even before private contractors had signed contracts with the state. The auditors pointed out that these failures to comply with state and federal rules ultimately could mean a loss of federal funds for cleanup work.