FBI probes SHA's awarding of contracts

Audit finds discrepancies on competitive bidding

October 29, 2004|By Timothy B. Wheeler | Timothy B. Wheeler,SUN STAFF

The FBI is investigating the State Highway Administration's awarding of $5.25 million in engineering contracts after legislative auditors found "a number of discrepancies" suggesting that competitive bidding rules might have been bypassed.

In a review released yesterday, the state Office of Legislative Audits reported that it had found improprieties in SHA's selection last year of seven firms to perform traffic engineering studies.

Three of the firms given contracts of $750,000 had not originally been ranked among the top seven prospects by the agency's internal reviewers, the auditors said.

One of the three firms employed the wife of an SHA manager who was involved in the contract reviews, the report said.

Moreover, the auditors found that the manager and three others involved in reviewing the traffic-study contracts had not filed required financial disclosure forms for the last six years.

Bruce A. Myers, chief legislative auditor, said his office recommended a criminal investigation after auditors found a potential conflict of interest. The audit was prompted by a tip called in on the state's fraud hot line.

SHA Administrator Neil J. Pedersen said last night that his agency is cooperating with the investigation, though its internal review "has not determined that any illegal activity has taken place." A call to the FBI last night was not returned.

Until the investigation is complete, Pedersen said, the highway agency plans no disciplinary action against the employees, whom officials would not identify.

Officials did not identify the engineering firms involved, though spokeswoman Valerie Edgar said all are performing satisfactorily.

The contracts were not given to low bidders because they involved technical work. Each was subjected to a two-tiered internal review in which each firm's qualifications were studied and ranked by independent teams of SHA employees.

Auditors found documentation of those reviews lacking. One firm had been ranked no higher than 12th by one review team, though it ultimately wound up among the top seven recommended for contracts.

That firm employed the spouse of one of the SHA managers reviewing the contracts - paying her about $20,000 from December 2002 through September last year.

Prompted by the audit, the agency is moving to reinforce safeguards against conflicts in contracting, its administrator said. SHA has asked the State Ethics Commission to review how many of its 3,200 employees should be filing annual financial disclosure forms.

"I want an organization that's beyond reproach in terms of integrity," Pedersen said.

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