Posted on Wed, Nov. 15, 2006

email this

print this

reprint or license this

Audit finds DOT squandered millions

By JOHN O’CONNOR

johnoconnor@thestate.com

A state audit of Department of Transportation operations determined the agency has wasted millions of dollars, did not properly document all contracts and has questionable relationships with some contractors.

The report, released Tuesday by the Legislative Audit Council, represents more than a year’s work. Lawmakers said its contents could spur changes within the department when the General Assembly meets next year, while Gov. Mark Sanford renewed calls that DOT be moved into his Cabinet.

Although the report uncovered at least $50 million that could have been saved through management changes, that’s less than 1.5 percent of what DOT spent during the three-year period that was examined. The agency spent more than $3.5 billion on projects and allocations during that time.

House Speaker Bobby Harrell, R-Charleston, requested the audit last year. He said he expected minor problems and was surprised by the conclusions.

Harrell said a House committee would study the report and recommend changes. Senate Finance chairman Hugh Leatherman asked two subcommittees to study DOT funding and structure.

“What we found in the report is that there are very serious issues we need to deal with,” Harrell said. “All of this will probably lead to some very serious changes at the department.”

According to the report:

• Contracts to outsource construction management resulted in millions in higher costs. Contractors were paid $8.7 million for projects that were not completed, and DOT paid an unnecessarily high management fee, costing the state an extra $32 million.

• The agency did not complete federally required independent estimates for half the projects surveyed. The state saved about 3 percent on projects where an estimate was prepared compared with those with no estimate.

• DOT’s history with one engineering firm “raised questions of favoritism and ineffective management of resources.” The agency also asked contractors to help pay for a conference to improve biker and pedestrian safety, creating a conflict of interest.

DOT executive director Elizabeth Mabry was to address the audit at a special state Senate subcommittee hearing Friday, said spokesman Pete Poore.

In a written statement, Mabry noted that during the three-year period audited, there were no problems with the vast majority of DOT spending.

“I believe that anyone who reads the report with an open mind will recognize the overall result is no findings of significant issues on 99 percent of the dollars entrusted to SCDOT,” Mabry wrote.

In a response to the report, Transportation officials said the audit made broad claims without fully investigating the employees and businesses involved. The audit also ignored 100 pages of documents detailing negotiations, they said.

DOT said a section critical of a contract for management services ignores an estimated $3 billion saved in rising costs and inflation by completing the work more quickly. The contract’s higher management cost ensured projects were on time and under budget, department officials said.

The governor noted the audit found some temporary employees were hired at higher salaries and for longer periods than allowed by state law. Sanford called the report “disturbing.”

Sen. Larry Grooms, R-Berkeley, will head a panel to consider restructuring Transportation. Grooms said he was disappointed to learn the department, according to the audit, deliberately delayed reimbursement from the federal government during the legislative session, costing $1.5 million in interest.

“I think they were trying to mislead the General Assembly and public by saying, ‘Look, we’re broke,’” Grooms said.

DOT routinely asks lawmakers to raise the state’s 16 cents per gallon gas tax, the sixth lowest in the country, to fund road projects. Some lawmakers said they would not discuss the gas tax until questions about agency management are resolved.

Reach O’Connor at (803) 771-8358.