Several Deficiencies, Concerns Found in Sewerage & Water Board's Drainage, Financial Operations

An evaluation of the drainage and financial operations of the Sewerage and Water Board of New Orleans (S&WB) found numerous concerns in both areas.

The examination of the S&WB’s drainage operations was prompted by the August 2017 flooding in New Orleans, the subsequent management turnover at the S&WB, and the revelations that the city’s drainage pumping system was not able to operate at maximum capacity.

An assessment of the S&WB’s contracts and contracting processes was added to the project after the passage of House Resolution 92 during the 2018 Regular Legislative Session.

In examining the S&WB’s contracts and contracting processes, auditors found the board did not have adequate written contract policies and procedures for (1) recordkeeping and reporting, (2) procurement, (3) monitoring, (4) change orders and amendments, and (5) payments.

Auditors also evaluated the S&WB’s contract documentation. They found control and compliance deficiencies, including possible constitutional violations relating to the donation of public funds, possible bid law violations, lack of appropriate approvals, and insufficient monitoring of conflicts of interest.

In assessing the S&WB’s drainage operations, auditors noted the board operates its pumps with a combination of power purchased from Entergy and power produced from its own turbines. Auditors found it costs the S&WB more than double to produce its own power rather than buy power from Entergy. In addition, auditors cited concerns with the S&WB’s internal communications, declining cash reserves, and ability to hire and retain qualified staff.

Auditors noted as well that the U.S. Department of Homeland Security, Office of Inspector General, began an audit of FEMA Public Assistance grants in November 2017 to determine whether the S&WB had accounted for and expended the money according to federal regulations and FEMA guidelines. As of the date of this report, the audit had not been finished.