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In yet another blow to California's troubled high-speed rail project, California's state auditor said this morning that the project's financing is "increasingly risky" and its oversight inadequate.

In a follow-up report to her agency's 2010 critique of the project, state Auditor Elaine Howle said the California High-Speed Rail Authority's most recent business plan relies on uncertain funding sources and that "the program's overall financial situation has become increasingly risky."

Howle's report is the latest in a series of critical reports about the project, including by the Legislative Analyst's Office and the rail authority's own peer review group. Gov. Jerry Brown is trying to press the nearly $100 billion project through the Legislature this year.

Howle's report questions the authority's ridership projections, saying the group that reviewed those numbers was "handpicked" by the authority's chief executive officer, and it accused the authority of failing to adequately manage its many contractors.

"Without sufficient staffing," the report said, "the authority has struggled to oversee its contractors and subcontractors, who outnumber its employees by about 25 to one."

Howle also said the rail authority violated a state rule prohibiting agencies from splitting contracts to avoid competitive bidding requirements, dividing $3.1 million in information technology services into 13 different contracts with one vendor over 15 months.

In a written response, the rail authority said contract management remains "a huge challenge for the authority due to a lack of sufficient qualified staff." But it discounted as "purely speculative" Howle's claim that the plan is financially risky.

The authority all but conceded that it had mismanaged its information technology contracts, saying it "will develop procedures to detect and prevent contract splitting."



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