Mineola, NY – Comptroller George Maragos released an audit of the $12.6 million VIP Splash Waterways Recovery Group, Inc. (“VIP Splash”), the controversial contractor for waterway debris removal following Superstorm Sandy. The audit revealed serious concerns regarding the awarding of the contract, and compliance with important contract terms, including payment of Living Wages, proper supporting documentation and employment of Minority and Women Owned Enterprises (“MWBE”). The audit could not provide definitive findings as the auditors were prevented from reviewing important documents due to the lack of cooperation by the Office of Emergency Management (“OEM”) and the ongoing federal and local investigations of VIP Splash. The audit was triggered by concerned constituents’ allegations of potential issues between VIP Splash and its subcontractors and the hauling of non-Superstorm Sandy related debris.
Comptroller Maragos stated “I am disappointed in the lack of transparency by the County Department of Emergency Management that would not allow the auditors to review important documents that should be in the public domain. The same lack of transparency by some subcontractors was equally unacceptable and we recommend that these vendors be barred from any further business relationships with the County. Serious questions remain on how a company formed in 2013 was selected over three other companies with more extensive experience. The auditors did not pursue obtaining the information with subpoenas due to the various ongoing law enforcement investigations.”
VIP Splash utilized the services of 11 subcontractors on the debris removal project, which provided services ranging from sonar scanning, labor, provision of boats and heavy equipment, and transportation of debris. As reported by media sources, the work of VIP Splash and some of their subcontractors has been under scrutiny by various law enforcement agencies, including the Nassau County District Attorney’s Office and the U.S. Attorney for the Eastern District of New York. As a result, certain records were unavailable for review by the auditors since they had been furnished to these other investigating agencies. Further, legal counsel barred officers and members of a key subcontractor, Operation Splash, from communicating with the auditors. In addition,
other subcontractors failed to reply to repeated auditors’ requests for information regarding their work on the project. These restrictions resulted in significant scope limitations which prohibited the auditors from verifying that employees of some of the subcontractors were paid in accordance with the County’s Living Wage Law. In addition, the auditors were unable to compile a full list of the individuals participating in the project, in order to review their affiliations with VIP Splash and Operation Splash.
The major findings of the audit were as follows:
? A review of the project’s Request for Proposal (“RFP”) process, and the County’s evaluation of the four vendors who responded, could not be performed because OEM, with the concurrence of the County Attorney’s Office, declined to provide the documentation to the auditors. The auditors noted that VIP Splash was established in 2013, the same year the contract was approved, while the other three companies which submitted proposals had extensive experience with disaster related projects and had been in business for 25 to 35 years.
? VIP Splash paid approximately $4.7 million to the 11 subcontractors that worked on the debris removal project. Errors and inconsistencies in VIP Splash’s reporting of the amounts paid to its subcontractors on the claim voucher submitted to the County were not detected by VIP Splash or the Nassau County Department of Public Works (“DPW”). A variance of over $1 million was noted between the amounts reported on the claim vouchers and the amounts subsequently reported by VIP Splash and the subcontractors which responded to the auditors’ requests for information.
? The project had an 8.62% Minority and Women Owned Enterprise (“MWBE”) participation rate, substantially below the Governor’s ambitious state-wide goal of 30%, the highest goal of any state in the nation. Although VIP Splash hired a subcontractor/compliance officer to oversee MWBE participation in the project, they and DPW failed to ensure that the compliance officer was kept informed when the contract was amended from its original $4 million amount to over $12 million.
The audit will be referred to the District Attorney and the County Attorney for further review. For a copy of the report, please visit our web site.
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