LIHU‘E — The construction of the Kaiakea Fire Station was driven up by un-reviewed name brand procurement, says an auditor’s report.
The Office of the Kaua‘i County Auditor on Thursday released two reports on the Kaiakea Fire Station project and cash management policies.
County Auditor Ernesto Pasion said the fire station was expensive when compared to other fire stations built recently. The report was concerned with the large number of brand name building materials that were used, with some of them considered to be high end.
The audit recommendations include procurement law training for personnel involved in capital projects and a team approach at all levels; adopting standardized procedures with materials, specifications, polices and procedures; re-using successful design concepts; and independent cost estimates.
Pasion compared the $403 per square foot construction cost of Kaiakea to an earthquake-safe station in California at $308, the Ewa Beach station at $370 and the Makalei station at $351. The comparison is more significant when site development costs are added, which brings it to $740 per square foot.
An example of the additional expense for name brand products are with the Viking gas range that was installed in the fire station instead of the generic electric range in the original bid.
“We recommended that the county avoid brand name products unless departments can justify why other products cannot be used,” Pasion said in a news release.
“This and other recommendations in the audit report are intended to make procurements more competitive and open, and enable future construction projects such as the Kapa‘a police substation to be built at an appropriate price.”
“We are always interested in learning new methods for managing costs,” states County Managing Director Gary Heu in his response to the reports.
Heu said recommendations are being implemented with note to areas of disagreement regarding decisions in building and equipping the fire station.
Kaua‘i Fire Chief Robert Westerman stated in Heu’s news release that the gas stoves are a cost saving effort. He said it also avoids problems with electrical power loss during emergencies.
The name brand equipment was about longevity and standardizing purchases to lower repair costs, the chief added. They can expect at least 15 years use with commercial grade equipment, which is saving the county money by not having to replace or repair residential-grade equipment every four years.
Local Hawai‘i Fire Fighters Association Representative Colin Wilson stated that the Kaiakea Station has a washer extractor and drier for the turnout gear worn by the firefighters.
“This specialized equipment is important to firefighter safety,” he said. “Fires create many carcinogens and it is important to clean the gear properly so the firefighters are not breathing in these harmful particles long after the fire is over.”
Guidelines require that proprietary specification requests have a pre-award review to justify a possible increase in expenditure, said Pasion. Many of the brand name specifications with the fire station did not follow this pre-approved protocol, he added.
The County Auditor report regarding county cash management practices looked at monitoring of county cash positions and immediate cash needs. It also looked at investing excess cash in short term investments.
The audit reviewed cash receipt processing controls at department and agency locations to assess monitoring and safeguarding. It also suggested compliance related documentation improvements.
Pasion said the Finance Department manages substantial amount of cash and short term investments that often exceed $200 million in 15 accounts maintained with four local banks. He said the accounts and investment yields are reviewed monthly when they should be looked at on a daily or weekly basis.
“It is critically important that the county ensures its deposits with financial institutions are fully collateralized and optimizes interest earnings by depositing with local banks that pay the highest yields,” Pasion says in the news release.
Good marks were given to the Records Unit at Kaua‘i Police Department, the Planning Department, the Buildings Division of the Department of Public Works and the Motor Vehicles Registration section of the Department of Finance.
Another concern was with cash receipt deposits. Police had allowed the same accountant who assists with daily bus fare counts to make bank deposits.
The report notes that the Finance Department response was in agreement with the recommendation regarding increasing the amount of funds on deposit with local banks that offer the highest yield. The response also noted that the Transportation Agency had taken corrective actions regarding the chain of custody of bus fare receipts.
Pasion said the emphasis of the audit was to assess compliance with Hawai‘i state laws regarding the selection of depositories and short term investment of cash in excess of immediate needs.
The audits can be found at Kaua‘i neighborhood libraries and online at www.kauai.gov/auditor/reports. The next audit of the county’s 2006–07 road maintenance project is due to be released by the end of August.
