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Friday, November 17    |    Upstate South Carolina News, Sports and Information

Auditors defend critical DOT report
Senate panels hear claims of law violations, sweet consultant deals

Published: Friday, November 17, 2006 - 6:00 am


By Tim Smith
CAPITAL BUREAU
tcsmith@greenvillenews.com


What's your view? Click here to add your comment to this story.

COLUMBIA -- State auditors who alleged in a report that the state Department of Transportation has wasted millions of taxpayers' dollars defended their work Thursday, telling two Senate committees that the agency's response to some issues is invalid or can't be verified.

Auditors from the Legislative Audit Council spent four hours briefing senators on two special committees looking into the audit. DOT officials will get their chance today to respond.

The Legislative Audit Council report released Tuesday accused the giant agency, which manages the nation's fourth-largest state-maintained road system, of mismanaging contracts and violating state and federal laws.

DOT officials have accused the LAC of inaccuracies and misleading statements in the report, claiming that no significant problems were found in areas involving 99 percent of the agency's expenditures.

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Sen. Linda Short, a Chester Democrat, attacked the audit as the hearing began, saying she was "offended" by its tone and its implications. She said afterward she believes it was intended to help push the agency into the governor's cabinet.

Other senators said they planned to be open-minded until after hearing all witnesses.

"We're not here to rush to judgment," said Sen. Harvey Peeler, who chairs one of the committees.

LAC auditors told the senators that they believe their work is solid and poked holes in DOT's official response.

Jane Thesing, deputy director of the LAC, said the agency's 99 percent figure is a "questionable statement," not only because the audit found problems with contracts totaling hundreds of millions of dollars but also because the agency didn't look at all of DOT's operations or expenditures.

She also denied that auditors refused to talk to anyone suggested by the agency or were sloppy in their reporting of the facts.

"We really do feel confident what we have in our audit is supported and really believe it is correct," she said.

The senators spent much of the time asking about two topics in the audit -- the management of consultant contracts tied to an accelerated construction program and the use of a consulting firm that had 13 contracts with DOT.

Thesing told senators that it appeared the final $253 million consultant contracts with DOT to help with the accelerated construction program were far "sweeter" for the consultants than what was proposed to the agency prior to negotiations.

Auditors couldn't find any documentation explaining how the terms were arrived at or why the agency agreed to such fees, she said.

The Greenville News reported last year that the agency chose to use consultants because it said that it would have had to hire 500 additional workers otherwise. The newspaper estimated that the cost of hiring such workers would have totaled $85 million less than what was spent on the consultants.

DOT has said the consultants saved taxpayers at least $120 million, a figure Thesing told senators could not be verified.

The audit reported that the contracts included fixed fees and paid $8.7 million to the consultants for nine projects that were eliminated from the contracts.

The audit also found the consultants' program and financial management fees were set too high. One contractor, Thesing said, had proposed a fee of 2 percent in a letter she found at DOT, but the agency eventually agreed to pay 4.5 percent.

The difference, according to the audit, was $32 million "that could have been used for other projects."

"The terms were out of the norm for good contract practice," she said.

Senators also were curious about findings concerning a Columbia consulting firm that provided management services.

The audit reported the firm provided former DOT officials as temporary workers at a cost of up to $120 per hour.

Thesing said DOT auditors had reported that the firm's liabilities exceeded its assets and that the firm asked that the agency pay it in $250,000 monthly installments in one contract to help the company with its cash flow.

The News reported earlier this year that some highway commissioners were questioning why the agency needed to use an outside firm at such a high cost to provide management services.


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