Audit Finds Problems At Harborview Failure To Get Competitive Bids, Employee Theft Among Items Cited

Harborview Medical Center violated state law when it did not seek competitive bids for its new staff day-care center, a project with $260,000 in cost overruns, state auditors say.

The day-care center, which opened in April, was built by subcontractors who got the job without having to submit to the competitive bidding process, the audit said.

Harborview blamed the overruns on expected donations of labor and materials that never materialized. Changes in the project’s design and scope also increased costs, the hospital said.

“Management at the hospital has been very responsive to our suggestions,” said Jeannine Erickson, an assistant state audit manager responsible for the Harborview report.

State law requires bids on contracts valued at more than $5,000. By failing to solicit bids for the day-care center, the state’s largest public hospital may not have obtained the best price, the audit found.

The day-care center was projected to cost $621,584, but the job was completed for about $883,000, said the audit, a regular annual review.

Auditors could not determine whether the lack of competitive bids directly caused the cost overruns, Erickson said.

Because there was no general contractor, the job went straight out to the subcontractors.

“When you don’t have a general contractor, that can lead to a lack of directional organization, and that can lead to cost overruns,” Erickson said.

The hospital also failed to require contractors to post performance bonds, the audit found. And it failed to retain 5 percent of payment until the project was finished, a state requirement intended to ensure contractors get the job done.

State auditors also found that in 1996, there were six instances when employees stole money from a cafeteria safe. The thefts, of amounts ranging from $75 to $510, totaled $1,783 and continued even after the safe’s combination was changed.

The hospital didn’t alert the auditor’s office, as state law requires.

Harborview officials said the hospital has new security arrangements, with computers and remote cameras now monitoring the safe. All future thefts will be reported, they said.

Employees also frequently patched into the state’s long-distance system to make personal telephone calls, Erickson said. Under that system, the state pays substantially less for long distance than the general public does.

While the employees reimbursed the hospital for their calls, auditors called it a bad practice because the workers get a discount not available to the public.

“There was no intent to deceive. There were just no controls,” Erickson said.