The Orange County Energy Authority has now failed its fourth audit, this time by state auditors who discovered that the company’s CEO evaded the board’s oversight by approving $1.8 million value of contracts and that the company has repeatedly didn’t be clear.
The most important concern California State Auditor Grant Parks’ workplace had with the company’s operations centered on the board’s lack of oversight in CEO Brian Probolsky’s bargaining course of.
State auditors discovered that Probolsky single-handedly accepted about $800,000 in advertising and marketing and monetary providers contracts, out of public view, apparently undermining company guidelines within the course of.
He subsequently inspired the board to extend these contracts, bringing the whole to $1.8 million, with out searching for different suppliers.
OCPA employees have repeatedly circumvented key parts of its contractual insurance policies. Consequently, OCPA can not display that it acted in one of the best pursuits of purchasers, the reviewers wrote.
Because the company launched just a few years in the past, Probolsky has confronted repeated questions on whether or not or not he is certified to run the company, given his lack of a school diploma or expertise within the energy business.
Of their 45-page report launched Tuesday morning, the auditors offered an extended listing of suggestions for enhancing the company over the subsequent few months, together with enhancing board oversight, processing public data requests sooner, and recruitment of extra certified personnel.
However it’s unclear what number of of those will really be carried out, with employees from energy authorities objecting to the audit findings.
OCPA indicated that it disagreed with all of our conclusions, though it didn’t establish any particular areas of disagreement, the reviewers wrote. Nevertheless, he stated he would think about implementing our suggestions.
It is a related response to the stringent audit issued by Orange County final December.
In an interview with Voice of OC on Tuesday, company leaders stated they might unveil a brand new plan to deal with all audits at an upcoming board assembly, with a chance for board members to deal with every concern raised. from the 4 audits.
We look ahead to working with our council to implement the insurance policies, Probolsky stated, including that they’ve already accomplished 40 % of the proposed plan. Specializing in steady enchancment will allow OCPA to attain its objectives.
In January, the company additionally employed Steadiness Public Relations to deal with the fallout from the assorted harsh scrutiny, hiring former California state auditor Elaine Howle.
The audit launched at present is a really thorough evaluation, Howle stated. I believe this enchancment plan will work as a roadmap for employees and the board, there might be some accountability right here.
Whereas the company was initially began in 2020 by the cities of Irvine, Huntington Seashore, Buena Park and Fullerton with the objective of providing extra renewable vitality choices for residents, questions remained about how nicely it was managed.
After two county audits and a grand jury report that highlighted most of the identical issues because the state auditors’ report, the county authorities jumped ship late final yr and the cities of Irvine and Huntington Seashore are mulling over do the identical.
[Read: Cloudy Contracts, Audits and Lost County Support: A Rough Year For OCs Green Power Agency]
The company additionally had one of many highest drop-out charges of any related program within the state, with solely 77 % of residents in collaborating cities agreeing to take part.
State auditors discovered that whereas Probolsky accepted the company’s authentic advertising and marketing and communications contracts himself, he couldn’t present any supporting documentation for the corporations he chosen.
With out this documentation, it’s unclear what components OCPA assessed when deciding on and can’t display its motivation for choosing the profitable proposal, the reviewers wrote.
The report discovered that Probolsky then break up the advertising and marketing and communications contract into smaller contracts that allowed him to approve them with out taking them earlier than the board, since he has the ability to approve any spending lower than $125,000 on his personal.
OCPA decreased the worth of particular person contracts to a stage that didn’t require a number of key oversight mechanisms that will have utilized if it had executed a single contract, the reviewers wrote. The impact of OCPAs awarding separate contracts on this approach has been to bypass necessities requiring board approval.
The reviewers additionally discovered that two of the advertising and marketing offers later had their contracts elevated from $50,000 to $125,000, which Probolsky didn’t report back to the board, a violation of company guidelines.
All three advertising and marketing offers have been ultimately introduced earlier than the board at Probolsky’s request and raised once more, with a mixed worth of almost $1 million. The reviewers discovered no proof that the company was looking for one other bid for these contracts.
[Read: OC Green Power Agency Expands Contracts Established Behind Closed Doors by CEO Last Year]
To deal with the difficulty, the reviewers stated employees have to carry extra purchases earlier than the board, observe the work carried out by contractors and guarantee there’s a aggressive bidding course of on any contract or proposal.
The reviewers additionally expressed concern in regards to the businesses’ failure to speak with the general public, a problem that has been highlighted by each energy authority audit thus far and by a number of members of the general public, with a highlight on the businesses’ glacial course of for evaluation of requests for public data.
[Read: Orange County Power Authority Criticized For Lack Of Transparency]
Whereas our evaluation of OCPA’s public data requests usually didn’t establish violations of state legislation, OCPA was restricted in its skill to rapidly and clearly display that it appropriately responded to public data requests, they wrote the reviewers.
Voice of OC filed a request for all communications between Probolsky, then Chief Working Officer Antonia Castro, and the remainder of the board, for the primary seven months of 2021 in July 2021.
The company has not but accomplished that request, turning within the newest batch of paperwork on February 23, 2023.
The reviewers stated they didn’t have the assets to find out whether or not the company dealt with requests for paperwork appropriately, solely whether or not or not the company responded.
Additionally they discovered that there isn’t any written process for monitoring how the company processes registration requests, which they beneficial altering within the close to future.
The reviewers additionally beneficial that the company instantly rent somebody with buying energy expertise, highlighting how the employees’s lack of expertise made shopping for energy harder, forcing them to outsource.
Whereas the company is within the technique of hiring somebody to supervise vitality purchases from 2021, auditors stated they should velocity up.
As a result of OCPA has not but employed this employees member, it doesn’t but have the technical capability to successfully oversee some facets of its vitality consultants’ work, the reviewers wrote.
Energy Authority employees hosted a press convention Tuesday morning following the discharge of the audit to announce all of the proposed enhancements, however many tremendous particulars are nonetheless being labored out.
Workers have largely outlined the problems they’re already engaged on to enhance transparency, together with a web site revamp, documenting current guidelines for processing requests for data and extra in a 19-point plan that , in accordance with them, might be made public within the close to future.
Additionally they identified that the audit supported their determination to not launch a lot of their energy buy contracts, including that they have been creating non-disclosure agreements for some member cities to evaluation these contracts, however declined to say who they have been.
Members of the company’s board may even have the chance so as to add extra to the plan at their subsequent assembly, with spokesman Joe Mosca promising the board can have the chance to deal with any criticisms raised through the audits.
Something delivered as a suggestion, we’re placing it earlier than the board, Mosca stated.
However they did not have solutions on what can be carried out to extend contract oversight sooner or later, saying it was nonetheless in improvement.
There have been only a few contracts general, the company did not execute a lot of them, Probolsky stated when requested why they weren’t reported to the board. It was an oversight by the employees that will replace our practices sooner or later.
Probolsky additionally stated they might attempt to present a quarterly report on their contracts to the board.
When requested if they’d carried out sufficient to speak with residents, Probolsky stated there was all the time a chance so as to add,” and Moscow highlighted how they have been increasing their current advertising and marketing contracts within the close to future.
The neighborhood advisory board may additionally see an even bigger function, with the council set to approve a brand new plan for his or her companies within the coming months.
Requested about earlier considerations within the county audit that the neighborhood advisory committee was too restricted by the chief government, Probolsky stated former committee chair Jose Trinidad Castaneda helped him craft agendas and it was they the responsibles.
The committee had full enter on what they mentioned.
Castaneda backed Probolsky, confirming that he helped craft every agenda right into a textual content at Voice of the OC.
Irvine will focus on withdrawing from the company tonight on the request of adviser Mike Carroll, who was the company’s former chairman of the board through the time Probolsky accepted most of the contracts sought by the auditors.
But it surely’s unclear whether or not he can have the votes to go forward with the withdrawal after adviser Kathleen Treseder stated she wished to remain on board.
[Read: Irvine Councilwoman Reverses Course, Plans to Stay in Controversial OC Green Power Agency]
Noah Biesiada is a Voice of OC reporter and a corps member of Report for America, a GroundTruth initiative. Contact him at nbiesiada@voiceofoc.org or on Twitter @NBiesiada.
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