California high speed rail help for consulting giant? Records raise questions about KPMG deal

Bid and contract prices diverged

KPMG’s winning proposal listed hourly rates of $35 for Managing Directors, Managers and Senior Associates, sharply below rates under its previous contract. CohnReznick Advisory scored higher on technical qualifications but lost the $24 million contract by two points on pricing.

Billing and staffing under scrutiny

The authority assigned work to the $35-per-hour Managers and Senior Associates, but KPMG billed them as Associates at $425 an hour, according to the report. KPMG did not deny the findings; a spokesperson said the authority knew the firm’s plan.

The report said KPMG billed taxpayers roughly $2 million more in four months than its winning cost proposal indicated. It also described hundreds of dollars per hour in charges for highly paid subcontractors, including a former High-Speed Rail CEO and a former board chair.

Wider oversight concerns

The report said the authority lost $4 billion in federal funding under Choudri after repeatedly missing deadlines to purchase trains. It also noted that an Inspector General investigation flagged travel spending as wasteful and unallowable, including expenses linked to two people from Denver, where Choudri previously lived.

KPMG holds more than a half-dozen active California contracts across state agencies worth more than $200 million, though CBS California had not reviewed those agreements. The authority agreed to pay four consulting firms a quarter of a billion dollars over two years, prompting questions about oversight.