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Inspector General report contends ART audit inaccurate

This photo of undercarriage work on an electric bus for the Albuquerque Rapid Transit project was part of a progress report by federal project management contractors who toured the BYD factory in Lancaster, Calif., last October. (Source: City Of Albuquerque)

Copyright © 2018 Albuquerque Journal

An Albuquerque transit manager contended he felt “under duress” last year when asked to sign off on paperwork required for the city to obtain nearly $23 million in federal funding for electric buses ordered for the Albuquerque Rapid Transit project.

The manager, who was interviewed by the city’s Office of Inspector General, was quoted as saying that he was “encouraged” by a transit maintenance supervisor and an outside auditor to sign a document stating that 20 buses manufactured by the China-headquartered Build Your Dreams Inc. had the legally required percentage of American-made components and parts.

The manager, who wasn’t identified in the report, said he felt uncomfortable “signing that the required components were there when he did not observe them.”

He finally agreed to sign if both transit maintenance manager Jim S. Carrillo and the city-hired auditor, Global Innovations Inc. of Tucson, Ariz., indicated on the document that he checked only a sampling of components. At the time, he had inspected only three buses, the OIG reported, not the 20 promised by BYD.

The transit manager’s account was included in the city OIG’s report released June 6, which provides new insight into the city’s troubled ART project.

Under a $9,300 contract, the city hired Global Innovations to conduct a post-delivery audit required by the Federal Transit Authority to ensure the BYD buses met the Buy America Act.

But the OIG concluded, after interviewing transit officials and inspectors earlier this year, that the final Global Innovations audit report wasn’t entirely accurate and that key city inspection documents cited by the audit are missing or don’t exist.

The contractor who produced the audit told the Journal in an email last week that she was preparing an official response to the OIG report but wouldn’t say when that would be issued.

The 73-page OIG report focused in part on how the city Transit Department met requirements to ensure federal dollars for the project, which was originally slated to begin operations at the end of 2017.

The city is seeking a total of $75 million in federal funding, including nearly $23 million for the ART buses. But the project is still undergoing review at the Federal Transit Administration.

Due to mechanical issues with the BYD buses delivered, including one bus described by an inspector Feb. 28 as “scary at high speed,” city officials are exploring new options to get the $133 million public works project – the city’s largest in history – up and running.

The mayor has proposed that the city and BYD alter their contract so the city accepts a smaller number of BYD buses and buys other buses to complete the order.

Major construction on the ART stations along a nine-mile corridor of Central Avenue is complete. But four of the 20 BYD buses promised are still waiting for inspection in California.

The 60-foot, 5-door electric articulated buses ordered for ART are a new model, which must complete testing at a FTA site in Altoona, Pa., before the city of Albuquerque can qualify for federal project money. Testing, which was expected to start Friday, could take from six months to a year.

BYD, which claims to be the largest electrical vehicle manufacturer in the world, told the Journal recently that it more than complies with the Buy America Act, which requires 65 percent of the bus parts to be domestic. The company, which has a manufacturing plant in Lancaster, Calif., says all Albuquerque electric buses have a 76 percent compliance rating.

“We completely support the OIG investigation, with full transparency,” BYD officials told the Journal in response to email questions.

An FTA spokeswoman last week said the agency was reviewing the OIG report.

Alicia Manzano, spokeswoman for Mayor Tim Keller, told the Journal in an email Friday, “The FTA has not given the city any indication that the OIG’s report changes our application for federal funds.”

She added, “The OIG report covers a lot of ground, and our legal department is working on their recommendations.”

Report problems

According to the FTA website, a resident inspector of the agency purchasing vehicles with federal funds is required to visit the manufacturer’s assembly facility during the manufacturing period.

The inspector must prepare a report providing accurate records of all vehicle construction activities and summarize how the construction and operation of the vehicles meet (or do not meet) the contract specifications.

Recipients of federal funds are supposed to keep the inspector reports and other Buy America Act compliance documents on file for FTA review.

The OIG report summarized interviews conducted earlier this year with nine transit employees who were sent to BYD’s manufacturing plant in Lancaster, Calif., to serve as inspectors over the past year.

While they communicated with their supervisors and filled out inspection checklists that weren’t designed for BYD buses, none reported filling out post-delivery report documentation, the OIG reported. “… and only one of the inspectors was asked (allegedly under pressure) to ‘certify’ that the required domestic components … were installed.”

Global Innovations compliance auditor Janette Hunter signed a statement dated Jan. 3 that she had conducted a “Post Delivery” audit of the documents related to the manufacture of 20 BYD buses and that the buses were in compliance with the Buy America Act.

Her report stated that “on file at the city’s procurement department is the City’s Resident Inspector Report, which identifies the inspection activities performed.”

The city couldn’t find such a report in response to two Journal records requests this month, and the OIG reported that two top transit employees interviewed said the Resident Inspector document was never written.

In addition, an assistant transit manager told the OIG that the city “was not in compliance” with another statement in the audit report involving city verification of BYD’s technical specifications. The audit report had stated that those specifications were found to be in compliance with what the city had required.

“None of the inspectors addressed how the construction of the vehicles fulfilled the contract specifications and final assembly cost, as the inspectors did not see the specifications and were not aware of the costs,” the OIG stated.

This photo of the BYD bus assembly line floor in Lancaster, Calif., appeared in a federal consultant’s report about the Albuquerque Rapid Transit project. The report on file with the city of Albuquerque was written by PMA Consultants of San Francisco. (Source: City Of Albuquerque)

The OIG concluded, “Based on interviews of inspectors and Transit Department key officials, most of the assertions (in the audit report) pertaining to the inspection process were not accurate.”

Inspection records

The Albuquerque transit manager who told OIG he felt “under duress” when asked to sign off on paperwork arrived for a two-week stint at the California bus plant Oct. 19 without any training or instructions for the trip, the OIG reported.

The manager said he was told not to have any communication with BYD supervisors or managers and was instructed to only “watch” the assembly process. He said he was not required to complete or submit any inspection documents.

The manager said a “situation” arose when he was asked by transit manager Carrillo and the city’s outside auditor to “sign off” on a document that stated that 20 buses for the ART project were in compliance with the Buy America Act. But he had checked only a “sampling of components” for compliance, the OIG reported.

He claimed the auditor told him that “signing the document was just a ‘formality’ to ensure compliance with the Buy America Act,” the OIG reported. She also said the required amount of components “were there” and that she could “guarantee it” the OIG report stated.

The manager said he ultimately agreed to sign the document with a caveat showing that his inspections were limited. He told the OIG he was “relying on someone he hoped was doing the right thing.”

The OIG report reprinted a document titled “Certified Domestic Content Schedule.” At the bottom is a handwritten statement noting that three buses were examined, Nos. 2, 3 and 4. “Buses 5-20 will be post delivery monitoring,” the statement added.

BYD’s delivery log, provided to the Journal, shows that 16 buses for ART were delivered sporadically, beginning in late October and ending Feb. 16 of this year. The city is awaiting four buses.

Carrillo retired in March and didn’t respond to Journal telephone calls seeking comment.

Transit spokesman Rick DeReyes said Friday that his agency was looking into the OIG’s assertions that inspection records weren’t completed.

‘Enormous pressure’

BYD officials recently provided more details about the delay in providing ART buses, as well as their interactions with the city.

In an email response to Journal questions, BYD said the company informed the city in June 2017 that the buses, scheduled to be delivered in October, would be delayed.

BYD said that, last October, then-Chief Operations Officer Michael Riordan telephoned BYD officials and threatened to terminate the city’s bus contract if buses weren’t delivered before Mayor Richard Berry’s term in office ended Nov. 30.

“We (BYD and the City) were under enormous pressure to make Mayor Berry’s deadline,” BYD told the Journal. “We understood how important it was and literally worked around the clock to get the first group of buses to Albuquerque for the Mayor and the River of Lights tour.”

Berry and other dignitaries rode the new ART buses to the event in Downtown Albuquerque on Nov. 25.

“BYD seems genuinely committed to meeting the (city’s) desire for an early opening,” stated PMA Consultants, a FTA project management contractor in a report forwarded to Albuquerque transit officials last November.

BYD attributed the delay in delivery of the ART buses to the city’s decision to make “dozens of modifications” to the design.

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