RICHMOND, Va. (WRIC) -- An audit of a city of Richmond streetlight maintenance contract found that city officials failed to properly manage and oversee said contract, allowing for at least $1.2 million in potentially unallowable charges, overbilling and questionable billings. The Office of the City Auditor (OCA) conducted this audit as part of the fiscal year 2023 audit plan, with the objective being to evaluate the "expenditures, efficiency and maintenance of the [city's] streetlights," according to the 41-page document provided by the city. Its findings will be released in phases. In this initial phase, only details on the Streetlight Division's expenditures were provided. A separate report will be issued on the efficiency, effectiveness and maintenance of city streetlights at a later date. "OCA has referred additional details of the audit to the Richmond City Council Office of Inspector General for further investigation into possible fraud, waste and abuse," said the city council in a Dec. 3 press release. What is the Streetlight Division? According to the office, the city's Streetlight Division both operates and maintains approximately 37,000 streetlights, five electric distribution systems and over 350 miles of overhead and underground wiring, as well as thousands of various pole types -- all spread throughout Richmond. This is in addition to the about 6,000 streetlights in the southwest portion of Richmond that, through a contract with the city, Dominion Energy operates and maintains. How drug shortages are impacting Central Virginia communities The office noted that, as of Nov. 7, the Streetlight Division had a total of 18 vacancies. It has not been fully staffed since 2014. "As such, the City used a combination of internal staff and contractors to complete general operations and maintenance of the electric distribution grid and streetlights," the office said. An overview of the OCA's findings As of Oct. 18, about $6.5 million of the $7.2 million streetlight contract had been spent. According to the office, about 55% ($3,597,885) of those expenditures were for a "streetlight count project," which aimed to inventory and document all of Richmond's streetlights. Approximately 40% ($2,608,025) went towards streetlight maintenance work. The remaining 5% was spent on additional labor at the Water Treatment Plant and "instrumentation and controls," described as "surveying field assets" in the audit. Of these charges, at least $1.2 million worth were potentially unallowable, overbilled or questionable, according to the office. This includes: About $754,614 in unallowable costs, including expenses for an assistant project manager and consulting services About $161,272 in overbilled costs, including vehicles, equipment and labor that was not actually purchased/completed About $289,405 in questionable equipment costs "Our assessment of internal controls found that the contract was not properly administered ormanaged by City staff to ensure services were rendered in accordance with the contract and toverify the accuracy of the billed labor hours and equipment," the office said. According to the office, bid lines were added to the contract and some of them "did not contain adequate details for the OCA to objectively determine what should be billed to the City." Furthermore, the use of the added line items found in "numerous invoices" was described as "inconsistent, unsupported and lacking in reasonable justification." City of Richmond no longer sponsors cold weather overflow shelter Overall, the office said that resources involved in this project were "mismanaged," which resulted in at least $1.2 million in unallowable charges, overbilling and questionable billings. "More importantly, these issues could have been prevented with proper contract management and oversight by City staff," the office said. Management failures by City staff An engineer manager was appointed as the contract administrator. According to the office, they were responsible for the following: Ensuring that services and goods were delivered in accordance with the contract's terms and conditions Obtaining and approving job estimates Verifying labor hours and classifications if required (time and material contracts) Certifying receipt of services and goods billed and that they were delivered in accordance with the contract's terms and conditions The contract administrator delegated the above duties to an engineer principal for the streetlight count project -- however, according to the office, the contract administrator "did not ensure the above tasks were carried out by the delegated staff." The described invoice verification duties were not performed. "The Engineer Principal informed the OCA they forwarded the invoices for payment without verifying their accuracy, essentially paying whatever the Contractor billed the City," the office said. This mismanagement contributed to at least $1.2 million in apparent unallowable charges, overbilling and questionable billings, according to the office. Unallowable administrative, consultant costs Regarding the $754,614 potentially unallowable charges, these funds were directed toward administrative and consultant costs that were not authorized by the contract. According to the office, they were billed under "Field Asset Surveyor" line items. A Field Asset Surveyor, per the job description obtained by the OCA, is someone who will make a record of city infrastructure assets, including their condition, position data and other related data points. This can include taking photographs. On the whole, the job is about collecting and inputting data found in the field. Under these line items, the City was instead billed administrative and consultant costs relating to an Assistant Project Manager ($476,363), an IT Consultant ($106,916) and the Contractor ($171,335). Seven killed in crashes on Virginia roads over Thanksgiving holiday "Since the contract was for staff labor, the line items were specifically intended for direct roles supporting the City," the office said. "The contract does not include line items for administrative work, so the Contractor should not bill the City for any administrative tasks." For example, the Assistant Project Manager's 6,228.25 billed labor hours were predominantly administrative-related, according to the office. During those hours, tasks logged on timesheets included updating calendars, filing various reports and calculating payroll, among others. Additionally, the city was billed for hours when the Assistant Project Manager worked on tasks for another company. According to the office, this included creating a website, researching trucking companies and more. "On July 13, 2023, the timesheet showed the Assistant Project Manager’s task for eight hours as 'No Internet,'" the office said. The Contractor's unallowable billed hours were initially not accompanied by timesheets, according to the office, meaning it could not be determined what tasks the Contractor was billing the city for. "Instead, the Contractor indicated they reviewed their calendar for various meetings and estimated the time worked to bill the City," the office said. ‘You just have to do the best you can’: Helene impacts live Christmas tree sellers in Virginia The Contractor also reportedly told the office that they "billed themself as the Field Asset Surveyor Lead because they were part of the Contractor's count project team." The office said they received no documentation to support this. The office added that, when comparing the Contractor's payroll records and hourly rates paid to employees to the rates billed to the City, it found an average markup of 139% -- which increased to 201% after a Feb. 2023 rate increase on all contract labor rates. Overbilling for vehicles and equipment not actually received According to the office, at least $161,272 was billed to the City for items and labor not actually received or completed. This included $38,994 for two vehicles -- one of which was an employee's personal vehicle. These vehicles were billed for an entire month at a time, including non-working days like holidays and weekends, as well as days when they were not used in the field. For example, 337 weekend days were billed -- totaling $17,652 in costs. "The Contractor informed the OCA they billed for the entire month because the vehicle waspurchased specifically for the streetlight count project," the office said of the Contractor-owned vehicle and its use. The office added that, when asked, the contract administrator and engineering principal both said they were "unaware" of these non-workday billings. How to pack your gun properly this travel season Additionally, a total of $65,664 was billed for equipment that was not actually purchased -- a measuring device that, per the Contractor's explanation, appears to have been billed for twice. Finally, the City was billed $56,614 for 745 labor hours that were not completed. This includes hours not actually worked and, in some cases, the same labor hours billed more than once across multiple invoices. The office said that this issue was exacerbated due to issues with timesheets. Timesheets for the entire month were not provided for some employees, while all sheets did not have lunch and breaks readily identified on them. Other timesheets had incorrect formulas that resulted in math errors. According to the office, two sets of timesheets were provided for the streetlight count project staff. These sheets contained different hours for the same employees on the same dates. "We also noted the second set of timesheets had an electronic modification date on or the day before they were sent to the OCA and appeared to have been modified to include labor hours for the IT Consultant and the Contractor," the office said. Richmond School Board outlines disciplinary system for student cell phone use under new policies Holidays, sick and vacation time were also billed in some cases. According to the office, the City does not pay leave for contract employees. Questionable, potentially incorrect equipment costs Due to "inadequate records and inconsistent justifications," the office said it could only estimate the total amount of questionably-billed equipment costs, which it said is at least $289,405. This includes equipment generally billed for the entire month -- including non-working days like holidays and weekends -- and equipment billed more than once under multiple bid line items. Additionally, employees' personal equipment -- like cell phones and laptops -- appears to have been billed to the City. "The Contractor indicated that staff were reimbursed or are due a reimbursement for using the equipment," the office said. "The OCA reviewed the Contractor’s payroll records and noted minimal reimbursements." The office spoke to the Engineering Principal about these questionable billings. "The Engineer Principal confirmed that they did not question the quantities of devices billed andapproved the invoices at face value," the office said. "Consequently, the City paid invoices that appeared to be inconsistent, unsupported and lacking reasonable justification, leading to apparent overbillings and mismanagement of resources. More detailed bid line items and billing requirements may have mitigated a few of the issues identified by the OCA. More importantly, these issues may have been prevented with proper contract management and oversight by City staff." The OCA's recommendations for the City The office provided seven recommendations for the City following this audit. In summary, the recommendations include asking the directors of the city's Department of Public Works (DPW) and Department of Public Utilities (DPU) to work to recoup the potentially fraudulent charges indicated in the audit, as well as determine how to proceed with the existing contract -- which could include contract termination. Richmond Public Schools celebrates construction progress, but still needs help They should also work to define a process to ensure that bid line items are "adequately defined in all contract documents" and that all employees and contractors should "explicitly understand what is to be billed." The office also said these departments must ensure that staff responsible for contract management and invoice review are "properly trained," and that a process should be developed to guarantee accuracy across all steps in the delivery of goods and services. Additionally, the office said the director of the Department of Procurement Services should work with the Chief Administrative Office and the City Attorney's Office to determine if the Contractor should be debarred. To read the full 41-page Phase 1 of this audit, click here.