An audit released by the Alabama Department of Examiners of Public Accounts on March 21 found the University of South Alabama had violated Alabama’s Competitive Bid and Public Works laws two times in fiscal year 2012.
The audit of the university was the second released by the ADEPA in the last year, which together span from 2008-2012.
A report of the audit states the university failed to comply with the Code of Alabama 1975, Section 39-2-2, by including set financial allowances in some of its bids.
The report cited bid specifications on two projects authorized at USA in 2012 that included fixed-priced allowances for specified areas of work that were not fully detailed.
The Specialized Laboratory Building project was awarded to a general contractor for $11.7 million, but included $420,000 for five specified areas of work.
It appears the details for those some of those areas were still undecided at the time of the original bid, which USA’s Vice President for Financial Affairs Stephen H. Simmons said isn’t uncommon.
“In a 200-page bid, we might not have time to decide on certain smaller items, like what security system we want to use,” Simmons said. “The allowance is a set price range included in the bid, and all the companies were able to bid on it. The specifications were not in there because we didn’t know those details at the time.”
Since these specified items were contemplated when the plans and specifications were prepared, failure to subject them to competitive bids appeared to not be in compliance with the Public Works law.
The report lists the $130,000 included for security and access control in the Specialized Laboratory Building project as an example of a violation.
Similar bid specifications for the $14 million Delta Dorms Phase II project required contractors to include a $175,000 fixed price for structured cabling, although details for this area of the contract were still undecided at the time the project was bid.
“This is the first time we’ve ever heard of any problem with how we bid construction projects,” Simmons said. “We were following what we thought were the rules for allowances according to the Alabama Building Commission.”
The ADEPA told university officials in May of 2013 such allowances should be considered change orders, which are defined as work added to or deleted from the original scope of work in a contract.
Simmons said there are some benefits to using allowances, but added the university would treat future areas of work inadequately specified as change orders.
It’s likely more findings could show up in future audits from projects bid before USA was aware of the violations, but Simmons said all of the recommended changes have been made and will be implemented moving forward.
“We’ve worked closely with the state examiners and we appreciate them pointing this out,” he said. “This was a learning experience, and we will do our best to be compliant in the future. We’ve done a lot of big projects at the university over the last few years, and they were almost perfect.”