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SLO County did not find any problems and is now forced to investigate



December 30, 2020

By KAREN VELIE

San Luis Obispo County spent several years refuting allegations that the San Simeon Community Services District violated competitive tendering rules related to government grants. Now, California has ordered an investigation into the county because it is the administrator of the three grants.

Allegations of failure to bid for contract work in the area began in 201

7. Residents and local activists in the area asked San Simeon officials and SLO County legal counsel to investigate the area’s alleged failure to bid for a large number of contracts. However, public officials rejected their attempt.

San Simeon CSD began applying for grants to upgrade its water supply system in 2016. Two years later, at the San Simeon CSD board meeting on June 18, 2018, regional manager Charles Grace asked the board to approve a $225,960 no-bid contract.

According to the minutes of the meeting, the contract for the engineering design of drinking water storage tanks will be handed over to Phoenix Engineering. The board of directors voted unanimously to approve Grace’s request.

In a public meeting, residents complained that the area did not comply with government regulations 4529.12, “All construction and engineering services should be purchased in accordance with a fair and competitive selection process.” San Simeon CSD officials replied that the contract is not for engineering or design, but for For professional services, so that they can contract work exclusively.

Prior to the board meeting, Henry Krzciuk, a resident of San Simeon, reached out to the Office of State Controllers to clarify the bidding requirements. State policy analyst Alexandria Green pointed out in an email that even if the contract is for professional services rather than engineering or design, it must still bid if the cost exceeds $45,000. In this case, the contract amount is USD 225,960.

SLO County entered into an agreement with San Simeon CSD in July 2019 to manage and distribute grants to participate. The agreement has been approved by SLO County Legal Counsel Rita Neal.

Then, Krzciuk asked Neal to investigate the award of the priceless contract. He forwarded an email from the Office of State Controllers requesting a bid for professional services contracts worth more than $45,000, and pointed out that the regional legal counsel Natalie Frye Laacke and Jeffrey Minnery supported the decision not to open the bid. Letter to Neal on September 30, 2020. Minnery and Frye Laacke are members of the law firms Adamski, Moroski, Madden, Cumberland & Green.

Krzciuk wrote in the letter: “There is no evidence that, in accordance with the grant agreement and state law, this project has a fair and competitive selection process.” “There are records showing that there are many objections to this exclusive procurement.”

On October 14, Neal informed Krzciuk that she would not investigate the issue based on the miner’s interpretation of the law and the state controller’s e-mail, which contradicted the miner’s interpretation.

Neal wrote: “When reviewing the information, you seem to disagree with the legal interpretation made by the San Simeon CSD attorney and the information provided to you by the Office of the National Treasurer.” It appears that the state has agreed to the mineral company.

Krzciuk turned to the Ministry of Water Resources of the State Council, which had provided grants, to investigate the failure to win the contract. As a result, the state ordered the county to investigate as the administrator of the grant.

SLO County’s Director of Temporary Public Works, John Diodati, said in a letter that on December 21, the county ordered the district to answer a long list of questions and record requirements for three state grants approved by the state in the past four years. In addition to asking questions about the lack of competitive bidding procedures in the area, the county’s problems appear to be centered on San Simeon’s construction of its water treatment facility on Hearst Ranch without any convenience.

The county’s six-page information query highlighted three state comprehensive regional water management grants, which were US$362,431, US$177,750 and US$500,000. One of them was awarded based on San Simeon’s status as a disadvantaged community.

SLO County’s issues and document requirements include:

  • A copy of SSCSD’s current procurement policy and a copy of the policy that was in effect when the wellhead processing project work was signed with Phoenix Civil Engineering
  • Investigation shows the location of the wellhead treatment project
  • Regarding when SSCSD board members or SSCSD staff learned about the fact or possibility that the wellhead treatment project or any part of it was constructed on land not owned by SSCSD, and whether and when to provide notification information area or DWR to SSCSD
  • SSCSD selected Phoenix Civil Engineering Company for documentation of the process of the reservoir expansion project.
  • Land Use Permits and Grading Permits in San Luis Obispo County
  • A detailed written response, including a legal analysis of applicable regulations, including but not limited to government regulations 4529.12, and should be accompanied by all the information that SSCSD supports for its response.
  • If the wellhead treatment project meets the standard conditions of the No. 84 proposal funding agreement and the No. 84 grant agreement, and whether the wellhead treatment project is in full compliance with the Funding Agreement and the grant agreement.

San Simeon CSD officials must comply with the county’s information requirements by January 20, 2021.




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