Friday, Jan. 7, 2005 | 11:13 a.m.
CARSON CITY -- UNLV and UNR violated the law in failing to ask for bids on millions of dollars of energy savings projects and some of them didn't produce any savings, a legislative audit said Thursday.
The examination of construction policies said the two schools did not go through the competitive bidding procedure that may have saved them money.
Deputy Legislative Auditor George Allbritten said that while the law was violated, the audit staff did not find any fraud.
The report was delivered to the Legislative Audit Committee that approved its findings.
Sen. Bernice Mathews, D-Reno, said it was not fair to everyone that the two schools handpicked the contractors for the work. She complained, "Bidding was not done."
The audit also said there was no evidence that the prevailing wage was paid, as required by law, on 18 of the 21 energy retrofit projects at the two schools and that change orders on projects were never approved in some instances.
Allbritten said, "Due to misinterpretations of the law, violations of policies and opportunities to use a convenient financing method, many of these projects were not awarded through a competitive process."
Since fiscal year 2000, UNLV contracted with a company called "e.three Custom Energy Solutions LLC" to conduct five retrofit projects totaling $6.2 million. There was no competitive bidding and the selection was based on a "competitive qualification process conducted by the state Public Works Board," the audit said.
The public works board identified e.three, which was owned by Sierra Pacific Resources until September 2003, as one of three firms that should be asked to provide proposals for future state retrofit projects. Although the three companies were identified, the auditors said UNLV should have put out bids on at least two of their projects as required by state law.
The auditors said one of the problems is confusion in the state law on the definition of "public works projects." The legislative committee agreed to seek a change in the law to clarify that these types of projects were subject to the law.
These retrofit projects are supposed to be cost neutral -- meaning the money spent on them will eventually result in the same amount or more savings in energy dollars. Auditors found that overall the UNLV and UNR projects were cost neutral.
But there were some that were not. For instance, the retrofit project at Thomas & Mack Center in Las Vegas is recording an annual savings of $11,133 but the yearly loan payments being made on the project are $74,454.
The Moyer Student Union Building at UNLV is making loan payments of $74,894 but the annual saving is only $46,732 in energy costs.
Assembly Minority Leader Lynn Hettrick, R-Gardnerville, said the law has to be clarified to define "cost neutral."
Hettrick was also concerned about bypassing approval of the chancellor in making change orders to projects. UNR awarded an environmental remediation contract at the Stead campus for $79,000. A change order increased the projects cost by $537,000 without review by the chancellor.
The auditors also said personnel were not "sufficiently involved" in two construction projects that resulted in significant cost overruns. Thomas & Mack Center hired an independent project manager to oversee renovation. But the manger terminated the contract before the project was completed. Then change orders totaling about $1.1 million were processed without obtaining approval.
Buster Neel, vice chancellor for finance and administration, told the audit committee that corrections were being made. He said the only disagreement with the audit is the definition of "public works" by the auditors.
And the legislative committee says that will be cleared up during the 2005 Legislature.
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