FINAL REPORT - San Bernardino Superior Court

Development Services Procured Without Competitive Bidding
Section 3: Power Plant Developments
The firm responsible for overseeing the viability, design, and construction of the Foxborough
Power Plant, Carter and Burgess, Inc., was selected to initiate the project based on previous
work with the City rather than on a competitive bid. Carter and Burgess was initially hired by
the City in October 2002 for assistance with the development, operation, and management of
electric and related utility services at the Southern California Logistics Airport. The October
2002 professional services agreement reflected initial steps the City had been taking toward
the development of Victorville 2. The City’s selection of the firm for this work was not based
on a competitive bid process.
City management began procuring professional services from Carter and Burgess in June
2004 for the Foxborough Power Plant based on the consulting relationship that City
management initiated with the firm in 2002, In July 2005, about a year after commencement
of the Foxborough project, the City entered into a formal agreement with Carter and Burgess
for the construction of the Foxborough Power Plant. Prior to entering into this formal
agreement, Carter and Burgess received about $1.5 million from the City for services relating
to the Foxborough Power Plant project.
Foxborough Power Plant Lacked Adequate Planning and Controls
Neither City management nor Carter and Burgess established a risk assessment, business
plan, or formal budget. Without such planning, the City proceeded without clearly defined
goals, milestones, or performance measures. In fact, the project was initiated with the broad
objective of providing low cost power directly to tenants at the Foxborough Industrial Park
without connecting to the California electrical grid system. However, toward the end of the
project City management changed course and looked at options to connect the plant to the
grid system.
No Risk Assessment
City management did not prepare an independent risk assessment and there is no evidence
that potential risks were formally discussed by the City Council. Specifically, City
management did not formally evaluate the risks and potential benefits of self-generating
power versus acquiring power from the electrical grid via power purchase agreements before
commencing the project. The Foxborough Plant, initially estimated to cost approximately
$17.5 million to build, was a major step forward in the City’s efforts to create a municipal
utility. Despite this major investment of funds and the City’s inexperience at constructing and
operating a power plant, no efforts were made to identify and mitigate financial, construction,
or operational risks of the project.
No Formal Business Plan or Project Budget
City management did not establish a business plan or formal budget for the Foxborough
Power Plant project. It is apparent from interviews with City officials and from a review of
related documents that the initial goal of the project was to construct a plant that could
provide sufficient electricity and steam to certain tenants at the Foxborough Industrial Park.
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Harvey M. Rose Associates, LLC