The District paid roughly $5.2 million in improper payments to the prime contractor on the D.C. Streetcar project from September 2010 through March 2019, a new report by the D.C. inspector general finds.
The allegedly improper payments included duplicate and unauthorized charges related to subcontractors, excessive overhead and service fees, and more than $900,000 for services that the report says “may not have been rendered.”
The $5.2 million represents about 9% of the $55.3 million in total that Omaha, Nebraska-based HDR Engineering Inc. received from the city during the audit period. The inspector general’s office recommends that D.C. recoup all $5.2 million from HDR, but the District Department of Transportation, which oversaw the streetcar project, says it’s seeking only about $4 million because it doesn’t believe certain charges were excessive.
Neither DDOT nor HDR, which performed program management services for the project, immediately responded to DCist’s emailed requests for comment. The streetcar currently stretches 2.4 miles on H Street NE and Benning Road NE and has long been plagued by contracting problems, from cost overruns to construction delays. The city spent more than $200 million on building the project, and though there are plans to expand streetcar service, they aren’t set in stone.
The inspector general finds that the purportedly improper payments to HDR stemmed from deficiencies in DDOT’s billing practices. “DDOT project managers lacked the expertise to review and approve invoices for payments,” says the report. “Instead, DDOT relied on the prime contractor to certify the accuracy of invoices for payment.”
HDR is said to have charged DDOT duplicate “fixed administration fees” for subcontractor work and to have failed to get written consent from that agency to hire four subcontractors. (More than 30 “subconsultants” worked on the project under HDR’s direction, according to the firm’s website.) In addition, the inspector general says HDR charged DDOT as much as $935,000 for miscellaneous expenses — including “copying, printing, parking, local travel, [and] incidentals” — that were unsupported by documentation.
Over the course of the contract, HDR also charged the District more than $73,000 for first-class air travel, $11,000 for “unreasonable lodging expenses,” $3,000 for “meals purchased when employees were … conducting meetings or working overtime” at its office, and $250 for alcohol, per the report. The ceiling price of the contract ballooned to $68.5 million last year from $10 million a decade ago.
As of Sept. 10, DDOT hadn’t asked HDR to explain or document the costs identified in the audit, agency director Jeff Marootian wrote in a letter included in the inspector general’s report. He said the agency would work with District procurement officials and attorneys to seek “a total reimbursement amount not to exceed $4,049,822” — $1.1 million less than what the inspector general says is owed.
