COLUMBIA, S.C. - A limited audit of how the State Budget and Control Board buys goods and services shows taxpayers could end up paying more money for some contracts and the public may be denied explanation of how decisions are made.

Members of the General Assembly asked the state Legislative Audit Council to review a process in which contracts may be awarded to vendors who do not have the lowest price. The law allows the state agency to give special preferences to businesses in the state or the United States, which may not always offer the best price.

"Although some companies benefit from these purchasing preferences, their effect includes higher prices paid by South Carolina taxpayers for the goods and services needed to operate state government. Competition is reduced," according to the report released Wednesday.

In his written response to the audit, Budget and Control Board Director Frank Fusco said the issue is a matter of law and can only be addressed by the Legislature.

House Majority Leader Jim Merrill, R-Daniel Island, is co-sponsoring a bill that would create a committee to study the state's procurement code and recommend changes.

"We need to look at the entire system and weigh the advantages and disadvantages of giving in-state firms and in-state businesses work over out-of-state and where is that cutoff," Merrill said. "Does the amount of taxes they pay and the number of people they employ counteract the lower price? That's something you've got to take into account."

Fusco said his agency has worked to ensure correct documentation of the state purchases, which was recommended by the audit.

The LAC said the Budget and Control Board failed to maintain adequate analysis of state purchases or what the evaluation score sheets are based on. That obscures decisions that are open for public review under the state Freedom of Information Act, the report said.

"There may be a perception that the decision-making process is unfair," the report said. "The basis of evaluator scores is important in determining the extent to which vendor proposals are analyzed and in ensuring the integrity of the procurement process."

Gov. Mark Sanford, who is chairman of the Budget and Control Board, was interested in the report's findings.

"He's for cost efficient government and he's for open government," Sanford's spokesman Will Folks said. "Obviously, anything that runs counter to those he's going to certainly investigate and likely recommend change."

Fusco denied the audit's findings that members of the evaluation panel are encouraged to destroy all notes pertaining to award decisions.

"Evaluators are instructed that they have no obligation to maintain such documentation and those that are maintained are subject to the FOIA," he wrote.

Jay Bender, a Columbia lawyer who specializes in First Amendment issues, said the audit is consistent with the response residents have had seeking information about procurement decisions.

"The Budget and Control Board seems to have the notion that it can create its own rules and is not bound by the legal requirement imposed on all other public bodies," Bender said.

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On the Net: Legislative Audit Council: http://www.state.sc.us/sclac/