Md. purchasers who overpaid remain in jobs

Pending criminal probes prevented discipline

$1.4 million spent on items

December 15, 2004|By Michael Dresser | Michael Dresser,SUN STAFF

The State Highway Administration purchasing official who paid $26.99 a can for windshield de-icer that costs about 97 cents at retail is still on the job and still has a government-issued credit card, lawmakers learned yesterday.

SHA Administrator Neil J. Pedersen told the General Assembly's Joint Audit Committee that the employee and others who paid exorbitant amounts for janitorial and maintenance items have not been disciplined because of a pending criminal investigation.

Pedersen said they have retained their credit cards - which were used to purchase such items as toilet bowl cleaner at 16 times its retail cost - because they need the cards to do their jobs.

That explanation floored Del. Charles E. Barkley. "It doesn't make sense for these employees to have credit cards," the Montgomery County Democrat said.

"I will take that advice and consider it," Pedersen replied.

At yesterday's hearing, Pedersen had to explain three separate cases in which the procurement practices of his agency have come under the scrutiny of law enforcement. Besides the purchases of overpriced goods, auditors briefed the committee on possible violations of state law involving consulting contracts worth $750,000 and maintenance shop work worth $190,000.

`A black eye'

"This is a black eye on the organization," Pedersen told the committee, which received a briefing from legislative auditors on a series of inquiries into questionable procurement practices at the SHA and other agencies.

The price of the de-icer - 28 times the cost at a local hardware store chain - was among 34 cases of profligate state spending found by legislative auditors in their examination of the agencies.

Tough to get fired

The continued employment of the officials who approved the purchases prompted Brian S. Losover of the state Office of Legislative Audits to question what it takes to get fired from state government.

He said top agency officials seem to have "a mind-set of waiting until the outcome of criminal proceedings before taking disciplinary action."

Losover also said the purchases showed that some state officials have become "rubber stamps" for their subordinates' spending.

"Virtually every one of these purchases was approved by a supervisor," he said. "Either they're not paying enough attention to it or there may be some collusion."

Wasp spray: $28.50

Losover brandished a can of wasp spray like one bought by the SHA. The cost to taxpayers: $28.50. The cost at Home Depot: $3.25.

Losover said the overpriced items were among $1.4 million in items for which the three government agencies paid exorbitant prices to 17 companies over a 1 1/2 -year period that ended in November 2003.

One of the firms was a Florida company that has been indicted for racketeering amid suspicions of kickbacks to government employees in other states, Losover said.

Evidence of the questionable transactions was referred to state and federal law enforcement agencies for criminal investigation, auditors said.

Secretary apologizes

One of the cases involved a series of transactions at Springfield Hospital Center, where purchases included 100-watt light bulbs for $3.89 each - six times retail.

Auditors said the third cluster of inflated transactions took place at Morgan State University, which in recent years has consistently pushed for more autonomy in purchasing decisions.

S. Anthony McCann, secretary of Health and Mental Hygiene, apologized for the lapses at Springfield and promised increased vigilance.

Morgan State President Earl S. Richardson said he initially wanted to fire the employee who approved purchases such as air freshener at $15.50 a can - 11 times its retail value.

Richardson said he reconsidered because he did not see evidence of fraud but thought the employee simply failed to pay attention to his invoices. The Morgan president said he took away the employee's credit card authority and suspended him 30 days without pay. The supervisor, who has since died, was reprimanded, Richardson said.

Compromising steps

Pedersen said federal and state investigators have advised him that any disciplinary steps he might take could compromise the criminal investigations. He held open the possibility of further disciplinary action after the probes are complete.

Pedersen assured legislators that he takes the cases seriously and is taking steps to tighten procurement controls.

"I will not tolerate this within the SHA," he said.

Hot line effective

One thing Pedersen, legislators and auditors agreed on was that the state employee fraud hot line that alerted auditors to the problems is working.

Chief legislative auditor Bruce A. Myers said the hot line has received more than 400 calls a year - double the number of calls expected when it was set up two years ago.

For more information, go to www.baltimoresun.com /audit.

Paying too much?

Sampling of items purchased by the State Highway Administration, Morgan State University and Springfield Hospital Center.

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