The City Council’s Audit Committee has asked City Auditor Eduardo Luna to review a program that will lead to bonuses being paid out to the city’s water and wastewater employees at a time the city is cutting the compensation of city workers.

The bonuses of up to $6,200 — or $4,000 after taxes — are being doled out as part of a “bid-to-goal” program first put in place in 1998. In a memo, Councilmen Kevin Faulconer and Carl DeMaio said 1,500 employees are scheduled to receive bonuses, which stem from performance during the 2008 fiscal year.

In the program, a private company creates a “mock bid” of what it would cost to perform city services. The city staffers attempt to keep their costs lower than the contractual amount based off that mock bid. If they succeed, employees keep a portion of the savings, with the rest going to ratepayers or being invested into the system. The program has been credited with saving the city millions and increasing efficiency.

During Monday’s committee meeting, DeMaio said the cuts to employee compensation make scrutiny of the bonuses especially important. He noted that an audit discussed Monday found that the city reported some meeting performance goals that weren’t actually met.

“I have no problem with gain sharing,” he said. “I have no problem with providing performance incentives, as long as the data’s accurate.”

Faulconer said the issue is important to discuss because the city is looking to enter into new contracts and expand the program throughout the Water Department. Faulconer said the program’s underpinnings must be reexamined, including the accuracy of the mock bid.

“It’s never the same, I think, with a mock bid than with someone who’s actually bidding for the work,” Faulconer said.

Mayor Jerry Sanders’ spokesman, Darren Pudgil, said in an e-mail: “As someone who has called for audits of all outside agencies, the mayor supports the important work of the audit committee—even when it directs the city auditor to audit the work of the external auditor. You can never be too careful, though this may be getting close.”

RANI GUPTA

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