Inspector General Finds California High-Speed Rail Paid $600,000 in Unallowable Consultant Travel Expenses

The California High-Speed Rail Authority's internal controls failed to prevent nearly $600,000 in unallowable travel expenses from being paid to outside consultants, according to a new investigation by the state's Office of the Inspector General (OIG). The audit contradicts the agency's assurances of strict financial stewardship, revealing that public funds reimbursed luxury rideshares to nightclubs, tiki bars, and cigar lounges.[1][2][5]

The OIG reviewed $1.15 million out of more than $2 million in travel reimbursements paid to four major consulting firms between mid-2024 and early 2026. The audit found that roughly 60% of those expenses—$680,500—lacked documented advance approval, and $592,900 violated state regulations or contract terms.[1][5][6]

The four firms identified in the report are KPMG LLP, acting as the financial adviser; Nossaman LLP, the legal services contractor; AECOM-Fluor Joint Venture, the program delivery support contractor; and SYSTRA/TYPSA Joint Venture, the track and systems design contractor. The $2 million figure represents the total travel-related costs paid to these contractors during the period, not the total amount determined to be unallowable.[5][6]

Among the flagged expenses were premium Uber and Lyft rides to and from a restaurant, bar, and nightclub between 9:40 p.m. and 2:30 a.m. The OIG report noted that these trips clearly appeared to be for personal enjoyment rather than for the benefit of the state. Other consultants billed the state for rides to Planet Fitness gyms, an escape room, a tiki bar, a Denver sushi restaurant, and private residences in Sacramento, Folsom, Walnut Creek, and Washington, D.C.[1][2][5][6]

The investigation also highlighted significant air travel irregularities. One consultant flew a private aircraft from Washington, D.C., to California, calculating a $4,182 cost in each direction, and proposed to be reimbursed at a self-calculated "premium" commercial rate that the Authority subsequently paid. The OIG noted that no private aircraft use had been approved prior to the trip, nor was there evidence that the premium fare was an appropriate reimbursement amount.[5][6]

Other air travel violations involved legal service consultants who frequently booked flights on the same day the travel occurred. The report detailed instances where same-day flights cost as much as $588, compared to $188 when booked three weeks in advance, violating state requirements that call for flights to be booked at least seven days ahead.[5][6]

Furthermore, the Authority reimbursed more than $118,000 in international airfare. Some of this was for a design contractor's staff based outside the United States, despite international travel being explicitly prohibited under their specific contracts.[1]

The structural failure identified by the OIG extends beyond individual expense claims to the Authority's management hierarchy. The report found that contract managers often felt they lacked the practical authority to approve or deny travel, with some trips being approved based on the assumption that the CEO or executive team had verbally ordered them.[5][6]

In some instances, agency staff were unaware that consultants were traveling until the invoices arrived. Even when trips were approved, the agency frequently accepted vague justifications, such as "typical M-F week" trips, without sufficient vetting or records to justify the need for the travel.[1][5]

In response to the findings, the High-Speed Rail Authority has committed to implementing corrective actions between December 2026 and March 2027. Authority spokesperson Matt Rocco stated that the agency "takes these findings seriously" and will work with the inspector general's office to fix the issues.[5][6]

"In response, the Authority will strengthen internal controls around consultant travel, implement more rigorous documentation and approval requirements, and recover any improper costs identified," Rocco said in a written statement. The agency plans to audit the four firms' expense claims and establish approved consultant office locations.[5][6]

The OIG plans to conduct a follow-up evaluation after March 2027 to assess the Authority's progress in adopting the recommended changes. The findings emerge as the high-speed rail project, originally approved by voters in 2008 at a projected cost of $33 billion, faces a revised cost estimate of at least $126 billion with no tracks yet laid.[5]