County overpaid company, audit finds

By Tony Cook

Thursday, March 27, 2008 | 2 a.m.

The county sewer district overpaid a company more than $227,000 through a series of questionable contracts and employment arrangements, a county audit found.

The Clark County Water Reclamation District hired the company, Severn Trent Laboratories, in August 2003 to manage its water testing lab. That $389,000 contract stated that several Severn Trent employees would provide the service, including Brett VanDelinder, who would manage the lab on-site at a rate of $90 an hour.

But eight months into the yearlong contract, the district hired VanDelinder to run the lab at an annual salary of $85,000.

At that time, the payments to Severn Trent should have been reduced, according to the audit, released late last week.

Instead the payments increased, the audit found. Payments changed from hourly rates to a flat rate of $34,000 a month with no explanation of how that amount was reached, the audit said.

The district awarded Severn Trent three more contracts, all of which named VanDelinder as the sole Severn Trent employee providing services — even though he was a paid employee of the district. In all, auditors estimated the district unnecessarily paid $172,600 to Severn Trent for VanDelinder’s services.

“Unless the company can show they performed additional services or replaced an individual, then we need to be reimbursed,” County Auditor Jerry Carroll said in an interview.

The company also got paid about $54,500 more than what was allowed under its contracts with the district, the audit found. In several other cases, auditors found insufficient documentation to justify payments.

District General Manager Richard Mendes asked for an audit in August after lab employees — who also had approached the Sun — complained that their long-standing concerns about the Severn Trent contracts had not been taken seriously.

The employees raised concerns about the district’s dealings with VanDelinder almost from the start, but to no avail.

Billy Clark, a lab chemist with the district, raised questions about the deal in an October 2004 letter to then-County Manager Thom Reilly.

“How would the ratepayers of the Water Reclamation District feel about their fees paying for the same service twice? Well, that’s what’s been occurring here at the district since April 2004,” he wrote.

Reilly asked district staff to investigate and they referred the matter to Tim O’Shields, whose company, FoundationBuilders Inc., was under contract with the district to develop employee performance manuals, conduct lab audits and provide leadership and ethics seminars.

Before that, O’Shields had been Severn Trent’s project manager under the company’s first contract with the district. Thus, the district was essentially asking the contractor to investigate itself.

“I don’t think that individual should have been looking at those things,” Carroll said Wednesday. “I think that is pretty obvious.”

A district management analyst reviewed O’Shields’ response and said nothing improper had occurred.

The audit also looked at the FoundationBuilders contracts. It found that O’Shields did not simultaneously benefit from the Severn Trent and FoundationBuilders contracts. But it did note some discrepancies.

O’Shields received $20,193 for travel costs, but no receipts were reviewed to determine the propriety of those payments, the audit found. In addition, payments totaling $16,578 were made to FoundationBuilders based solely on “verbal authorization.” District policy requires written authorization.

Auditors said it also appeared that FoundationBuilders began work before a contract was signed, a violation of district policy.

District officials said they are still reviewing issues raised in the audit to determine whether any employees should be disciplined, but they noted that many of those involved in awarding the contracts to Severn Trent — including former General Manager Peter Archuleta — no longer work at the district. Some of the contracts, though, were approved by Chuck Ethridge, now an assistant general manager at the district.

VanDelinder also no longer works for the district, having left that post in February 2005.

VanDelinder and attorneys for Severn Trent did not return calls Wednesday.

The sewer district has referred the matter to the civil division of the district attorney’s office to determine whether the county has any recourse to recover what the audit found to be overpayments. The sewer district also has sent a letter about those payments to Test America Inc., which has acquired Severn Trent.

“It appears that Severn Trent provided additional services at the time that were not documented,” said Mary-Anne Miller, chief of the district attorney’s civil division. She said she couldn’t elaborate.