Posted on: Saturday, March 19, 2005
City auditor finds waste of money
By Robbie Dingeman
Advertiser Staff Writer
The city's failure to use competitive bidding on a number of contracts for goods and services in recent years has cost Honolulu taxpayers money, City Auditor Leslie Tanaka said in a report released yesterday.
Citing what it called the "costly and improper" purchase of 990 trash cans for $666,841 in 2002 without competitive bids, the report criticized the use of such "sole-source contracts" in violation of the state procurement code and city policies. Other manufacturers were available, and the city could have saved $300,000 through competitive bidding, the report said.
"There are indications of a pervasive level of procurement code violations," Tanaka wrote. "Anti-competitive practices are contrary to the law and costly for taxpayers."
The city's new director of budget and fiscal services, Mary Patricia Waterhouse, noted that the audit covered a period before Mayor Mufi Hannemann took office. Waterhouse agreed with some of the report's findings but defended other practices — including the trash-can purchase — as justified and proper.
Sole-source procurement is intended for situations when there is only one source available for construction, goods or services that cost $25,000 or more, according to the report. The uniqueness of the goods or service also can qualify it for a sole-source contract.
A total of 184 sole-source contracts valued at $25,000 or more were awarded from fiscal 2001-02 to 2003-04, and an estimated 20 percent from a random sample failed to meet the sole-source criteria, the report said.
Further, the city used the capital improvement, or construction, budget to pay for the trash cans, violating city policy and driving up the debt service for borrowed money, the report said.
Tanaka proposed several policy changes. To see the complete audit, go to www.honolulu.gov/council and click on the Office of the City Auditor.
Reach Robbie Dingeman at rdingeman@honoluluadvertiser.com or 535-2429.
