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Time to move on

February 26, 2011
Cape Coral Daily Breeze

Cape Coral City Council will consider on Monday a proposal that calls for another audit of past components of the city's on-hold utility expansion project.

Mayor John Sullivan proposes to hire two auditing firms, R. L. Townsend & Associates, Inc., and Kessler International, to conduct a combined construction/forensic audit of the Southeast 1, Southwest 4 and Southwest 5 components of the UEP.

He says in the Jan. 26 memo to council that because the utility contractor, MWH, did not provide all of the information sought in a previous audit, that another one - with Kessler delving deeper into records to look specifically for possible mistakes or miss-billings - needs to be conducted.

Otherwise, the mayor adds, the city cannot restart the expansion project.

"There have been many unanswered questions about the audit of SW-1 thru SW-3 because of the fact that MWH is not forthcoming with the records necessary to complete that audit I do not feel that we can continue with the utilities until we find out that everything was done properly or what was not done properly in the past. The audit could very well keep us from falling into traps in the future," Sullivan states.

When first proposed a few weeks ago, the cost of the audits was estimated at $160,000 to $180,000.

With $150 million to $200 million in the phases in question alone, and nearly $1 billion at stake from start to completion -assuming the UEP makes it to completion -we understand why Mayor Sullivan wants to make sure that any non-compliance issues are identified.

We also have no issue with audits per se as previous reports have, in fact, found problems, most of them with city oversight of the massive, multi-phase expansion designed to extend water, sewer and "dual," or re-use, water services citywide.

However, Cape Coral City Council needs to make sure of two things before embarking on yet-another analysis of work completed and paid for: One, that the city is not paying for work already performed in-house and two, that there will be some quantifiable benefit to be gained to justify the cost, especially since Mayor Sullivan says his goal is money back from the contractor.

We're not convinced of either.

As a result of previous audits performed, the city has put a number of controls in place. Among them is a better in-house review of payroll records so as to reconcile those documents against invoices submitted by the contractor to the city, a key sticking point with the previous Kessler audit.

MWH provided the city auditor's office with access to - though not copies of - payroll records for 2004 through 2007, a timeframe covering much of the expansion areas proposed to be audited.

The auditor's office then submitted its findings to the city procurement office for reconciliation with invoices.

Bills were paid based on that reconciliation process, which was put into place due to previous audit recommendation. The city is just reaching the closeout point and has realized some savings, around $200,000, according to city officials.

Since the city administration has put better controls in place, we would urge council to first determine if these controls are inadequate before spending a substantial amount of money - an amount that, based on the cost of previous audits will far exceed the initial estimates - before ordering an outside re-do.

That's just good business.

Also good business is having some idea of a practical outcome that can be applied to city practices. Again, did the previous audits not outline the right areas for improvement? Were those recommendations not implemented or were they implemented improperly?

Council needs to make a strong determination of fact here before throwing more money at past projects addressed and readdressed without any findings at all to verify that things were not done, to use Mayor Sullivan's phrase, on the "up and up."

Another $180,000-plus for "peace of mind," especially when audit after audit has apparently wrought none, is a costly placebo for what ails us on the utility front.

Finally, with no criticism of either Rich Townsend or Michael Kessler or their respective firms, we're not sure what the mayor is thinking by suggesting specific companies.

The city has a very well-defined process for hiring professional expertise. That process requires the city to develop and advertise a request for proposal, an evaluation of submissions received, a recommendation by staff, a council vote, and then negotiations as to the final scope of work and cost.

Council should not even attempt to bypass this process.

Simply put, from both a fiscal and practical standpoint, it's time to move on.

We believe the city can better use its time and money by using recommendations from audits already completed as well as input from past council members and local professional organizations, such as the Cape Coral Construction Industry Association. Legitimate criticisms of payment structure and costs have been raised but left unaddressed since at least 2008.

Look forward by re-negotiating the various contract points raised.

For it's look forward the city must, as the utility expansion project needs to be restarted.

Just ask the ratepayers who are paying bills that have grossly escalated due, in large part, to the project's stoppage and a new plant built for a projected customer base that is now well into the future.

Looking in the review mirror is fine; it can prevent an accident or two.

Concentrating on the thoroughfare in front of you does the same thing - and it's the only way to get to the planned destination ahead.

- Breeze Newspapers



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