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Cape to consider audit of water plant construction

By Staff | Aug 27, 2011

R.L. Townsend and Associates say they can perform a construction audit on the North Cape R.O. Plant for $60,000, but would charge more if they were to look at the plant along with any associated projects.

City council will discuss on Monday whether to redirect some of a previously pledged $200,000 for the construction audit, effectively switching gears from auditing the SE 1, SW 4 and SW 5 portions of the utility expansion project.

Mayor John Sullivan brought the proposal forward after Utilities Director Jeff Pearson discovered what he felt was an inordinate number of change orders during the construction phase of not only the North Cape R.O. Plant but the Everest Water Plant as well.

The mayor thinks there’s an opportunity to recoup some money from the project, up to $970,000, which would equate to 1 percent of the North R.O. Plant’s total cost of $96 million.

“I think we’re going to find we weren’t billed properly on everything,” Sullivan said. “I’m not saying anybody did anything wrong, this isn’t a witch hunt. The whole idea is to find out if we got what we paid for.”

When council originally pledged the $200,000, it was also to include Michael Kessler’s firm, which would conduct a forensic audit along with Townsend as part of a team.

The city auditor’s office is said Kessler wants $140,000, the remainder of the allotted funds, to conduct a forensic investigative audit for the North R.O. Plant.

The city auditor’s office said a forensic audit required more time and higher fees and was not a usual practice.

“Such investigative work would normally be initiated upon the discovery of heightened risk factors or ‘red flags’ or indicators of fraud or abuse,” City Auditor Margaret Krym wrote in a letter to city council dated Aug. 19.

Sullivan said he would favor letting Townsend complete his audit before pledging the remaining amount to Kessler.

“If Townsend is going through the audit and he sees something funky, he’ll let us know,” Sullivan said.

Councilmember Marty McClain said the city needs to wait until the construction audit is concluded before dedicating itself to a forensic audit.

McClain believes the project came in on budget and did not exceed the maximum guaranteed price.

R.L. Townsend and Associates is based in Plano, Texas.