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Construction Audit Criticizes Oregon DOC

A report by Oregon state auditors released March 18, 1999, cited over $4 million in questionable expenses paid to contractors during a 2,348 bed expansion at the Snake River Corr. Institution in Ontario.

The secretary of state's Audit Division recommended that the Dept. of Corrections recover $465,000 paid to Hoffman Construction Co., a Portland firm that coordinated the project.

The audit report criticized the corrections department for entering into vague contracts and then failing to properly monitor them. State auditors found the department had paid $170,000 in disallowable overhead and purchasing expenses, $28,000 for catered luncheons for Hoffman staff and prisoner workers, and almost $107,000 in excessive travel and living costs. Another $3.7 million in payments to Hoffman and two other contractors involved in the Snake River expansion project also were questioned.

Corrections officials did not dispute many of the audit's findings but claimed they had identified and stopped some of the improper payments before the report was released. "A lot of the things were fixed, or things we had caught on our own," said DOC spokesman Perrin Damon. "And there are some things, some contract gray areas, that we need to determine whether we can ask for our money back."

Due to poorly-written contracts that did not define allowable expenses or specify dollar limits, the state paid $5,000 for ball caps and jackets, over $10,000 for safety incentive awards, and $77,000 in rental fees for equipment that could have been bought for $32,000. Other questionable expenses included cable television, lawn service, child care and a home burglar alarm for a Hoffman employee.

Hoffman officials acknowledged there might have been some inappropriate payments but disputed the amount. The company has already returned approximately $86,000 to the state.

Oregon lawmakers faulted the Dept. of Corrections for its financial ineptitude, but expressed relief that the contract deficiencies were discovered during the first project in the state's ten-year, $1 billion prison expansion.

The audit of the Snake River project came just three months after a critical review of the state's prison expansion program. An Audits Division report released in Dec. 1998 determined that Oregon is building more prison space than it will need and is paying almost 70% more than other states. The report found the state's average cost per prison bed was $77,649, which makes Oregon home to some of the nation's most expensive prison real estate.

Source: The Oregonian

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