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Queen Mary Report: Long Beach overpaid millions in repairs



The Long Beach City Auditor's office has released a report on the Queen Mary assessing that the city did a piss-poor job overseeing millions in taxpayer money intended for repairs and upgrades.


Iceberg, right ahead:

The Queen Mary has been a fixture in Long Beach since the late sixties, but the former ocean liner has fallen into such disrepair that it could cost $175 million to preserve the vessel, according to a report by the LA Times.

  • In 2017 the Times reported that it would take $289 million in renovations and upgrades to stop the ship from flooding.

  • The Queen Mary economic impact report stated that the ship "generated $205.3 million in economic output," with $93.7 million in economic output for Long Beach alone.


Context: The city auditor's report is the latest study on either the economic and/or physical sustainability of the Queen Mary.


  • A 400-page marine survey in 2015 looked at the structural integrity of the ship found there were "systemic corrosion problems" in the tank and that the Queen Mary could "collapse" within the next ten years.

  • A city-hired engineer reported in 2019 that, "without an immediate and very significant infusion of manpower and money, the condition of the ship will likely soon be unsalvageable.”


Key findings:

  • The two-year inquiry by City Auditor Laura Doud's office found that Urban Commons Queensway, the dormant ship's former operator, “misrepresent financial information and failed to perform their duties under the lease,” and that "some invoices included markups of up to 40% on material purchases."

  • The report mentions that the city signed a lease that "does not include requirements for Urban Commons to vet the subcontractors who would be performing work related to the repair projects."

  • The most damaging finding from the report is that "by late 2018, Urban Commons had spent all $23 million, however most of the 27 projects agreed upon with the city were not completed. A recent study conducted in 2021 stated that there is $23 million in critical repairs still needed."

  • "Seven projects had been completed, 11 projects had been partially completed, and nine projects had not started," the report stated.

  • And in its conclusion, Doud wrote, "In the end, with compounding markups, an additional management fee, and items paid for outside of the project scope, we know the city paid more than necessary for some of the projects."


Recommendations:

  • "Set requirements in the lease agreement for a vetting process for subcontractors who perform work on City funded projects."

  • "Require disclosure to the City of any related party transactions between the contractor and subcontractor."

  • Demand "a competitive bidding process for project work or document exceptions for specialized work. Define the process for obtaining and considering bids and proposals for work in the lease agreement."

  • Instruct subcontractors to have "detailed scopes of work to be submitted by all subcontractors."

  • Properly "track the completion of projects and budgets against original scopes of work. Monitor change orders and extra costs."

  • "Create written policies and procedures that define the documentation requirements for disbursing funds related to the projects performed."

  • Produce an "invoice form that shows the amount of detail to be included in invoices and what corresponding records should be supplied as back-up."

  • "If markups and a management fee are allowed, the details of these fees should be specified in the lease agreement."

  • Assure "compliance with the lease agreement by reviewing invoices to ensure items beyond the stated intent are not paid."



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