Inspector general flags procurement gaps and a contract amendment; lawmakers press HSRA on $537 million settlement negotiation

The Assembly Transportation Committee’s oversight hearing on the High Speed Rail Authority included a detailed operational review from the HSRA inspector general that identified procurement weaknesses and raised questions about contract amendments and conflict screening.

Inspector General Ben Belknap told the committee that a procurement review found the authority generally complied with advertising and award rules for the five procurements examined, but frequently missed target completion dates, lacked a standardized procurement scheduling practice, and had insufficient procedures to detect organizational bidder conflicts. "We looked at 125 disclosures from a 125 different firms, and we identified 12 instances we are concerned about where they did not disclose that they had existing contracts," he said.

Belknap also said his office reviewed six contract amendments and found one that added design work and "a questionable $1,000,000 performance fee" that proceeded without documented legal counsel approval, and that two other recent amendments also lacked evidence of legal counsel review. He recommended immediate steps to document legal review and to strengthen independent checks for potential organizational conflicts.

Lawmakers pressed HSRA for consequences and oversight. Vice Chair Davies and others asked whether the authority would set deadlines for contractor responses and whether unresolved questions would be escalated to appropriate enforcement agencies.

Committee members also questioned why a proposed change order and settlement with a CP2‑3 contractor — described in board materials as authorized for negotiation up to $537,300,000 — had been discussed in closed session. An HSRA representative said the item was discussed as part of pending litigation and that the board authorized a negotiation pathway; HSRA staff said final terms will be presented and voted on by the board in public before execution and that the finance and audit committee will provide oversight.

The Inspector General said 31 recommendations to the authority exist in total, with 11 pending and five not implemented; he urged the authority to complete a schedule risk analysis consistent with federal GAO and DOT guidance and to provide clearer procurement schedules so stakeholders can benchmark risk and progress.

The committee requested that the OIG and HSRA add expected implementation dates for outstanding recommendations on future updates to help members track progress and compliance.

No enforcement action was taken at the hearing; the committee asked for follow‑up documentation and timeline commitments from HSRA and the OIG.