Waste found in awarding state contracts

Friday, Oct. 12, 2001 | 10:04 a.m.

CARSON CITY -- The state government each year awards more than $500 million in contracts, but weaknesses in the system result in cost overruns and bad judgment.

The findings are part of a legislative audit that reports Nevada agencies "did a poor job in planning the contracts we reviewed." Auditors estimated it may be costing the state $500,000 to $1 million a year.

Legislative Auditor Gary Crews said Thursday, "There is no question the statutes are being violated." He said that in most cases there is no penalty for not following the law.

The examination of the state's contracting process was presented to the Legislative Audit Committee.

Assemblywoman Vonne Chowning, D-North Las Vegas, said the 1997 Legislature authorized the hiring of someone to correct these problems.

"Somebody's head ought to roll," she said. "This is very distressing."

Crews said the state Board of Examiners, headed by Gov. Kenny Guinn, "needs to hold somebody accountable." The examiners' board approves the contracts to hire either private firms or government agencies for jobs that the state can't do.

Sen. Joe Neal, D-Las Vegas, said, "The governor is supposed to have this under his control."

In his written reply to the audit, state Budget Director Perry Comeaux, who oversees the state contracting process, said the audit sample that was used "is not adequate to support some of the conclusions."

But he said the state is writing new requirements for planning, awarding and monitoring contracts. He said agency heads now have the authority and responsibility to make most of the decisions on the contracts, and it will be up to the examiners' board to decide whether it wants more centralized control.

Crews' staff also presented two additional audits, which criticized the state Purchasing Division and the lack of internal controls in state government.

The Purchasing Division failed to take advantage of cash discounts offered by vendors, thereby costing taxpayers more money, said the audit. The division purchases more than $100 million worth of goods annually and, oftentimes, discounts of up to 2 percent are offered. Division officials said they would take corrective action.

The audit on internal controls said that many agencies have not taken the steps to tighten the way in which they handle state money. For instance, a 1994 audit found that $21,000 was embezzled at the state Real Estate Division. An audit in 2000 found the division never fully implemented recommendations made in 1994 to reduce the risk of losing additional money.

But the biggest criticism came in relation to the state's process in awarding contracts. "For half of the contracts we reviewed it was uncertain whether the best vendor was selected," said the audit.

"Consequently, the state may not always receive what it bargains for and often spends more than anticipated," said the examination.

State agencies don't monitor the contracts, some don't specify dates for completion and others don't clearly set forth what is expected of the contractor. Of the 16 contracts examined by the auditors, only one imposed a penalty for poor performance.

"Poor planning contributes to frequent contract amendments," said the audit. "The Board of Examiners approved 27 amendments for the 16 contracts we reviewed. In total, contract amounts increased more than $5 million -- from $2.2 million to $7.4 million."