Audit another blow to $16 billion California water plan

SACRAMENTO, Calif. — California’s water managers appear to have violated state law by hiring an unqualified consultant to help plan Gov. Jerry Brown’s $16 billion project to build two massive water tunnels, state auditors said Thursday. The audit also faults the state Department of Water Resources for not finishing a cost-benefit analysis as the price climbs.

The audit is the latest blow to Brown’s plan to build twin tunnels east of San Francisco to deliver wa- ter from the Sacramento River mostly to farms and cities hundreds of miles away in central and Southern California. Last month, the nation’s largest supplier of irrigation water to farms voted not to help fund the project.

The “unexpected complexity” of the project has resulted in significant delays and cost increases, auditors said. As of June, the planning costs alone had reached $280 million, double the department’s original 2009 cost estimate.

They included nearly $14 million to Hallmark Group, a Sacramento-based company that the audit says “does not appear to possess the technical credentials or experience on relevant projects.”

The department could not show that it ever evaluated Hallmark’s qualifications for the job, auditors wrote. They said the department needed to seek competitive bids or at least demonstrate that Hallmark was qualified.

Brown’s office referred a request for comment to the Department of Water Resources.

“We must respectfully disagree” that state law wasn’t followed, the department said in its response. It says the state has received “excellent value and quality” since the Hallmark Group was hired in 2008. Hallmark’s primary goal was cost control, where it has “done an outstanding job,” officials wrote.

The department and the Hallmark Group both said auditors misunderstood the firm’s role in the project by assuming Hallmark was primarily doing construction project management that requires a licensed engineer or general contractor.

Hallmark, in a statement, faulted auditors for “failing to accurately characterize the purpose for which Hallmark was employed on the project.”