Saturday, December 06, 2008

McBride: Sanitation "Audit" A Sham

Following up on this, also from Matt McBride:

Dear New Orleanians,
On Wednesday I shared my findings regarding the Metro and Richard's lists of addresses where city trash service is supposedly being received. You can read the text of that report here:
I showed how many of those addresses were simply not legitimate. That's a problem, since the part of the trash contracts that deals with invoicing says this:
"The invoice will count service locations approved and receiving services on the 15th of the invoicing month."
You can find those contracts, presented publicly for the first time, here:
That provision, which is identical in both the Richard's and Metro contracts, says the trash contractors are supposed to be invoicing the city based on actual service locations. That's why the address lists are so important, and irregularities in the lists are such a problem; the lists are the contractual, legal basis for the millions of dollars the city is paying every year.
At least, that would be the problem, if the contracts were being run according to how they're written. They're not.
Instead of invoicing based on the number of actual service locations, the contractors invoiced (and city paid) using numbers bearing only a truthy resemblance to reality. Invoices were submitted - and paid! - based on numbers either from:
a) city estimates in the bid specifications issued before the contract was activated in January, 2007. These numbers were only meant to be estimates to make comparisons among competing bids easier, but somehow they got carved into stone when the contracts were awarded. These numbers - 60,000 locations for Richard's and 40,000 for Metro - were the basis for the invoices and payments throughout 2007. They never changed, even though the city was trumpeting the fact that people were returning every day.
or b) numbers which have murkier sources. In 2008, Richard's started invoicing for 63,000 locations, while Metro increased the invoiced total twice to numbers that don't match actual unique address counts.
From what I found, it is clear there hasn't been any connection between these invoice numbers and the address lists, since the address lists actually contain far fewer "real" addresses than what the city is paying Richard's and Metro for. As a result, city taxpayers have ended up paying a flat, multi-million dollar amount to these companies over the last two years, which is likely millions more than would have been due under the actual contract terms. Add in all the irregularities with the companies' address lists, and its a very big mess.
With all that in mind, I wanted to preview the Nagin administration's latest effort to convince the public the trash contracts are being executed compentently and fairly. It is their "house count audit."
The "house count audit" is supposed to independently determine for the city exactly how many houses are getting trash service - nearly two years after the contracts started. In the public's minds, this would probably involve an outside firm coming into City Hall and poring over the trash companies' address lists. But that's not what this "audit" is about. In fact, it appears this audit is not an audit at all, but simply an elaborate exercise in CYA .
For this exercise, the Nagin administration paid $250,000 to city consultant PFM to conduct the audit. PFM subcontracted the effort to a partnership of local data slicer-and-dicer GCR & Associates and the Virginia solid waste consulting outfit of Gershner, Brickner & Bratton (GBB). There is a lengthy summary of the work on GBB's web page:
The webpage subtly hints at the fact that the audit was months late in getting underway, noting a "aggressive" schedule. According to published reports, the audit is due Friday, December 12th.
The methodology for the audit is a whiz-bang technical mashup of vehicle-mounted GPS receivers and GCR's witches brew of data pulled from Entergy bills, post office records, and Sewerage & Water Board records.
From what I can gather, GCR is producing some kind of list where they think it is likely folks are receving trash service (not where they know service is received). GBB/GCR calls these addresses "prospective refuse collection points." Then GBB, with their GPS boxes and wireless antennas, seems to be going out on trash collection days and noting who has their cans out, and then tying that into the database.
Missing in this "audit" of the trash companies is the obvious - there is no interaction with the trash companies and their records. In effect, it is people driving around looking at trash cans and creating a brand new address list. There seems to be no provision whatsoever to determine if the city is getting double billed for any of those cans, or whether those cans should even be there. I also wonder how GBB/GCR accounts for people who might not put out their cans - or who do not have them within sight of a passing car - the days their auditmobiles roll by? And what about the year and a half of service the city had already paid for by the time the audit began?
Frankly, it's the goofiest audit methodology one could come up with. It's like going to the Grand Canyon, spending the entire time in the gift shop looking at postcards, and then coming home and telling everyone how Grand the Canyon is! It seems designed to avoid looking at the actual records in order to provide plausible deniability in case irregularities are uncovered. It also avoids placing the Sanitation Department in the uncomfortable position of having to explain their very poor oversight and contrary execution of these lucrative contracts. If nobody's looking at the records - and based on the actual records it seems no one is - then no one can say anything conclusive about them and their obvious problems.
Allow me just to remind you of some of those problems:
- claims of "service" to 2500 duplicate addresses between Metro and Richard's for their most recent monthly address lists. Examples include 90% of the addresses on Bellaire Drive and 95% of the Grand Route Saint John addresses. There's even two addressess (4924A and 4924B Bienville) which appear on both the Richard's' and Metro lists.
- claims of "service" to possibly hundreds of demolished properties and properties targeted for demolition
- claims of "service" to unallowed multiplexes and non-existent trailer parks, even including double bills on one Algiers trailer park which has been closed for over a year.
My conservative estimate of the combined result of this overbilling (which comes about by virtue of both the flawed contract administration by the city and the flawed recordkeeping by the contractors) is a loss to the city of at least $1 million over the past two years. That number is probably wildly low. Add in another $250,000 for performance of auditing tasks which should be done already, either by the contractors or the Sanitation Department, and there appears to be gobs of taxpayer money being wasted over the past two years, based on the contractors' own records.
Keep all this in mind when the Nagin administration soon announces that the trash contracts are just fine, because their bought-and-paid for "audit" says so. An audit that ignores records and creates replacements for them is no audit at all. It's a sham.
Best regards,
Matt McBride

Well done, Matt.


I'm curious to see the spin game prepared for the audit release.

We need to gut out our Department of Sanitation.

2 comments:

B said...

Other than gutting the Department of Sanitation, there's one more thing we should be demanding to ensure that we aren't soaked again. It's suggested by three words: "lists of addresses."

Lists of addresses, expenditures, services, calls answered, complaints, resolution of complaints, code enforcement, permits, crime, crime, crime, court activities, D.A. activities ... ALL. OF. IT. Everything should be available as an RSS download from the city's Web site. When that happens, and everyone can be a Matt McBride, we won't have nearly as much of this shite occurring.

Or maybe that's what the walking Id is afraid of ...

More here, and here.

Civitch said...

From Wikipedia: "Audits are performed to ascertain the validity and reliability of information, and also provide an assessment of a system's internal control."

But that will be impossible in this case, because the auditors are *conveniently* not even evaluating the data that the department has collected!