State audit: Highway Department procurement practices, county employee 'P-card' oversight

A state audit report was completed last month by the Comptroller's Office of Genesee County's procurement practices for the Highway Department and the use of purchasing cards by county employees. The audit was discussed at the Ways & Means Committee on Wednesday.

Local officials say the Comptroller's Office lacks real-world pragmatism when it comes to its bidding and procurement recommendations for construction and road projects; and they claim its findings of inadequate oversight of "P-cards" or purchasing cards are simply wrong.

The random audit looked at the period Jan. 1, 2014 through June 12, 2015.

Key Findings:

• The Highway Department did not have documentation that it always made purchases from the vendor with the lowest bid price;
• County officials and employees who were provided with purchase cards did not always comply with the purchase card policy;
• The Treasurer’s Office did not adequately audit purchasing card transactions.

Key Recommendations:

• Maintain adequate documentation to help ensure that purchase contracts are awarded to the lowest responsible bidder in accordance with the GML;
• Ensure that employees who are provided with purchase cards understand their responsibilities, sign the cardholder agreement and adhere to the policy;
• Perform a thorough audit of purchasing card activity to determine if County policies are being followed and cost savings opportunities are being realized.

According to Katherine "Eve" Hens, director of Purchasing, it is patently false that P-cards did not have properly signed user agreements on file.

"All of the documentation for P-card holders and their transactions is on file, including past P-card holders," she told the committee. She said she gathered up the files and met with the auditors to set the record straight and the auditor looked at the files and said "OK, fine, I guess everything's here." And that was that.

Hens also said P-card holders are given a policy book on card use guidelines and they must watch a tutorial video; they must sign agreements acknowleging they understand the rules.

There are 125 P-card holders in Genesee County government.

"We have a more efficient system than in the past," said Treasurer Scott German.

The state had criticized the few instances of above-limit purchases, but German said those cases had special circumstances. The example he gave was a deputy going to Florida to retrieve a prisoner and using his P-card to cover several transactions at one point of sale. Hens noted that in such cases, one of three people has to approve the transaction or the card will automatically be declined: Scott Germen, herself, or "Heather."

German said there were some "semantics" involving people from the Comproller's Office, which led to some miscommunication.

"What a fun audit that was," said Tim Hens, County Highway superintendent.

It was later noted that the audit occured during a "time of transition."

Tim Hens said the way in which projects are put out to bid with vendors is in keeping with how his department has operated for 60 years, ditto for other counties in Western and Central New York.

With a three-month seasonal window of opportunity to do outdoor work once bids are processed and awarded, there needs to be flexibilty, Tim Hens said, or the work wouldn't get done.

The state wants "to help ensure that purchase contracts are awarded to the lowest responsible bidder."

To an auditor in Albany, that means award a single contract to the lowest bidder.

But what Genesee and Monroe and Livingston and Orleans and other counties do is put out a "catalog" of bids to a variety of vendors for materials such as asphalt, pipes, quarry rock, etc., and select the mix that offers the best overall value.

For example, Tim said, if the low bid comes from a quarry in Pembroke, but the job's in Pavilion, the additional mileage to haul in materials will add 50 cents per ton to the job, so a vendor closer to the job site would likely be chosen even if their bid was a little higher.

As a compromise, the state suggests creating zones.

"The state says we should have zones set up in the County with lowest-priced vendors designated in each one," Tim said. "It works from a computer screen in Albany, but not in the real world, and not with a three-month construction window."

The county agreed to the state's recommendation to keep a journal. It will cite specific reasons in each instance that a purely low-price bid was not accepted.

"We will have that documentation to show in the event of another audit," Tim said.

The audit unearthed about $7,000 in overpayment for 24 miles of road striping for town roads, but there was no breakdown provided for it. Going back through all the road logs and trying to determine where .5-percent in a year's worth of road-work expenses were incorrectly calculated would be impractical, Tim said.

"If there's a good faith audit, then there should be give and take for errors," Committee Member Marianne Clattenburg said. "That would be a waste of money."

The county's written corrective action plan will be completed and forwarded, as required, to the state within 90 days.

To view the full audit click here.