Inspector General flags procurement and technical issues in South Shores classroom replacement audit

The Office of the Inspector General presented a comprehensive "cradle-to-grave" audit of the South Shores Elementary School classroom replacement project at the Bond Oversight Committee meeting on Nov. 6, 2025.

Inspector General Sue Stangle told the committee the original contract was awarded to PCL through a best-value procurement for $19.3 million; 28 change orders totaling $2.2 million raised the project to $21.5 million, an 11.3% increase. The project began in October 2021 and finished in September 2024, about 71 days behind schedule.

Auditors reviewed prequalification, procurement, incurred costs and technical performance. Senior Auditor Damon Melie said auditors found incomplete bank letters and mismatched contractor performance scores in prequalification materials but concluded those issues did not affect the award outcome. The procurement review found PCL was selected under the district’s best-value process but recommended updating the procurement manual to reflect evaluation criteria actually used and tightening signature verification on bid documents.

The incurred-cost review found an overbilling of bond-cost calculations — auditors estimated an overbuild of about $18,000 due to incorrect bond-rate application — and noted that some change-order documentation was incomplete after the district suffered a prolonged cybersecurity incident. Auditors said facilities implemented permanent withholding of overbilled amounts and updated policies to ensure correct bond-rate calculations.

A technical evaluation identified two "question" change orders (T509 for $4,253 and T618 for roughly $22,611) that auditors said should be back-charged or avoided; one was tied to delivery damage and the other to a contractor-caused defect in stair nosing. The team also documented improper handling and disposal of suspected asbestos-containing materials by a subcontractor (work was stopped, material tested and proper abatement procedures implemented) and corrosion on stainless fixtures attributed to coastal exposure. Auditors recommended using corrosion-resistant materials on coastal projects and improving design coordination to reduce construction errors.

Stangle said PCL generally adhered to contract terms but disagreed with some findings; the company chose not to contest the audit. The report documented three cost-recovery actions totaling $45,517 and urged updates to bank-letter rules, best-value documentation, and mandatory signature verification.

In response, Alex O’Brien, deputy chief facilities officer, said the district has implemented corrective measures, including permanent withholds for overbilled amounts, updated design standards for coastal projects, and increased constructability and pre-bid analyses. He told the committee that some documentation gaps resulted from a cyberattack that disrupted electronic records and that facilities has since migrated and verified hard-copy information.

Committee members pressed facilities staff on why some questionable costs passed routine pay‑application reviews and what training, escalation procedures and oversight will prevent similar chargeable items from slipping through. Facilities staff said they are strengthening training for review staff, elevating unresolved claims to senior managers, using more potholing and geotechnical checks to reduce unforeseen utility conflicts, and convening a cross-divisional task force to analyze change-order trends across projects.

The OIG presentation was provided for information; no formal committee action was required. The full OIG report was made available to committee members and posted with the committee materials.

Ending: The committee thanked OIG and facilities staff for the review and the district’s commitments to implement the recommendations and monitor corrective measures across the bond program.