We are all in it together!
It is a comfort that whistle-blowers are helpful in exposing mismanagement of risk. Sadly, in some cases the whistle-blower’s efforts are unwelcome; see the recent Wirral Council situation. (See press report here)
Our research has found Report No. 1004706 from the Washington State Auditor’s Office Washington State Parts and Recreation Commission. The assertion from the whistle-blower was the possible mismanagement and misuse of public funds related to a new sewer and water distribution system at Flagler State Park.
Caution is always required when reading these reports because the full facts are rarely disclosed. Consultant agreements and construction contracts lay at the heart of this matter. The outcome from the investigation was that ‘there was reasonable cause to believe an improper governmental action occurred’.
The report is worth an investment of time to read, certain matters being almost beyond comprehension. The project took 10 years to complete during which time the cost grew from slightly more than $140,000 to more than $7 million. A construction contractor was paid $106,096 for a drain field replacement system that did not work. The commission paid a construction company $1,422,131 for a new sewer system that failed and was shut down.
To correct the problem an additional $1,346,596 was paid to the same consultancy firm to correct the failed system that they designed in the first instance. The Commission hired a vendor to pump sewage from the failed system without soliciting competitive bids.
The vendor provided this service without a contract, at a cost of $734,799. The report refers to Change Order 3 totalling $15,075.90 to repair an underground oil heating tank the construction firm damaged whilst digging.
The change order read:
‘ In spite of substantial efforts in locating the contractor’s backhoe hit an existing heating oil tank for building 110 resulting in clean-up effort.’
Section 5.10.B of the contract stated:
‘The contractors shall repair any damage, including that to the property of a third party, resulting from failure to comply with the requirements of this contract of failure to exercise reasonable care in performing the work.’
It is unfortunate that this clause does not say at whose cost! There is a lot more to read!
The report highlights project risks and the need for stringent contract/project management.
