An audit released this week by Long Beach City Auditor Laura Doud found a lack of proper procedures and oversight in the City’s Emergency Board-Up Services Contract.

Emergency board up service, which is authorized by the Municipal Code as a requirement to enforce health and safety regulations and is overseen by the Asset Management Bureau, is used by the City to secure unsafe or unhealthy conditions on private property—such as broken windows, damaged doors, or open roofs due to vandalism or fire—in cases where the property owner cannot be reached or chooses not to personally obtain service.

The audit, which was released Wednesday, was based on a complaint received by the City Auditor’s Fraud Hotline, and found that the City’s handling of the procurement process and lack of involvement in the use of subcontractors has left it open to potential fraud.

According to the City Auditor’s office, although the total costs for emergency board‐up services averages less than $100,000 annually, there were enough questions raised during the initial analysis to warrant an audit of this contract.

The audit found that, although the original contract had expired as the City solicited bids through the RFP process, the City continued to award work over a six month period to the prior contractor who agreed to wait for payment.

Additionally, it was found that subcontractors were not properly vetted by the City. The vast majority of the work on the contract was subcontracted to a company in Santa Ana, and the audit states that the City did not properly ensure that rates were reasonable, proper insurance was in place, and that the subcontractor was able to adequately perform the service.

Emergency Board-up rates were increased just two months after the contract was executed, the audit also found. The new contract included labor and material increases of 5% and 10%, but after only two months labor rates were increased another 5% and materials by as much as 65% with no justification or documentation as to why the increases were needed.

Lastly, the audit found that the billing cycle from the date of service to the invoicing of the property owner averaged 218 days.

“The City has experienced many budget cuts over the past few years which have resulted in extensive reductions in City staff. While the various City departments must focus on the areas of greatest risk, we cannot ignore that proper procedures must be followed for every contract. Lack of attention to proper policies and procedures creates an opportunity for fraud,” Doud said in a statement. “Additionally, costs of emergency board‐up services are billed directly to the property owners and it is essential that the City verify that they are receiving fair pricing.”

The complete audit of the City’s Emergency Board-Up Services Contract with a detailed explanation of the City Auditor’s recommendations can be viewed on the City Auditor’s website.