Metro’s top managers Monday agreed with an audit report that criticizes the transit authority’s handling of federal money, saying blame for the problems rests with a previous Metro administration that left the agency in a state of near dysfunction.
The audit, done for the Federal Transit Administration, lists 14 deficiencies in Metro’s management of grant money from April 2012 to March 2013, saying the agency lacked adequate financial controls and often did not adhere to contracting rules in hiring vendors.
“As someone who was in this field, in federal grants management, for years, I’m embarrassed,” said Mortimer Downey, a member of Metro’s board of directors, which met Monday to discuss the report. Others on the board also voiced concern over the failings cited by the auditors. “I’m committed to fixing these issues,” Downey said.
The board met to approve a list of responses to recommendations made in the report, which is in draft form. After the agency’s responses have been added to the document, a final report is expected to be issued in early May.
“We do not dispute the 14 findings,” General Manager Richard Sarles told the board, echoing his staff. “Rather, we are embracing the recommendations, and we are taking the corrective actions necessary to implement each and every one of them.”
Reciting a list of problems that he said he inherited when he became Metro’s top manager in 2010 — crumbling infrastructure, expiring labor contracts, unqualified employees in key jobs, “major communications issues with our customers” and numerous other issues — Sarles said: “Just as the rebuilding of our infrastructure is not complete, neither is our internal rebuilding,” meaning improvements to financial controls.
Seated next to Sarles, Metro’s chief financial officer, Carol Kissal, told the board that when she arrived at the agency in 2009, “I found a financial department that was in a state of chaos. The analogy I would use is that we had a ship without a navigator.”
In the time frame covered by the audit, 2012 to 2013, Sarles already had been general manager for two years. But he said his initial focus after he took charge of the agency was largely on infrastructure problems directly affecting riders and on safety issues, particularly failings cited in a federal report following a 2009 train crash on the Red Line that killed nine people.
He and other top managers said Metro has since made important changes to its accounting and procurement systems. They said that by August, the agency will be finished developing all the financial-control improvements called for by the audit report.
“I’ve said repeatedly over the last three or four years that this place was hunkered and bunkered and had not been kept up to the shape it should be in,” Sarles told reporters after the meeting. “There have been significant advances, but they’re not complete. And that’s what this review reveals, that there are more things that need to be done.”
Among an array of failings, the report cited two instances in which Metro overcharged the federal government for work done with grant money. In one case, the report said, the transit authority billed the FTA double the FTA’s $451,812 share of a project. Metro said the mistake was later detected and the money returned.
The report also said that Metro awarded millions of dollars in no-bid contracts — including one for $14 million — in violation of rules requiring at least three bids. The agency also appeared to steer work to a preferred vendor who lacked proper expertise, the audit found.
Sarles, Kissal and other top managers listed numerous technical changes that have been made in Metro’s procurement process, including oversight in the awarding of contracts, as well as new systems for keeping track of federal grant money and how it is spent.
The audit comes while Metro is involved in a campaign led by Sarles to persuade political leaders in the Washington area to invest $26 billion in the transit network over the next three decades. Asked if she thought the report cast doubt on the trustworthiness of Metro’s financial controls, Kissal said the agency deserves the public’s faith.
“I feel really confident and really proud of the work we’ve done,” she said after the board meeting. “What we’ve done is geared toward fixing the [financial] system that was put in place in 2007, and it’s geared toward providing more transparency and accountability. That’s what the FTA wants, that’s what our riders want, and that’s what we’re providing.”