Delaware State Auditor R. Thomas Wagner suppressed report criticizing powerful friend
The investigation focuses on DSU using state funds to award nearly $1.5 million in no-bid contracts to a heating, ventilation and air-conditioning company, according to a draft of the report obtained by The News Journal. Many of the contract awards violated state bidding law and the work was performed without the necessary city permits, DSU and state officials acknowledge.
DSU's purchasing and contract procurement is overseen by Richard C. Cathcart.
State Auditor R. Thomas Wagner Jr., a fellow Republican, said he initially "stayed hands-off" from the investigation because it affected Cathcart, and he wanted to make sure "nobody could say there would be a conflict of interest." But as the report approached its final draft last fall, Wagner said, he intervened to hold it back because he had concerns about its conclusions.
"It was a work product that was not going to go out under the banner of the auditor's office," he said.
"Anytime you do an investigation, it can be blown out of portion, as [Hicks] is obviously attempting to do in this case," Wagner said.
Wagner offered few specific criticisms of the audit Hicks performed but did say the initial draft report failed to account for DSU's rationale for not bidding the contracts.
"The bottom line is, should they put that stuff out to bid? Yes. Did they? No," Wagner said. "Did they have an argument for why they didn't? And the answer is yes, they did. And they can stand on that argument."
DSU officials no longer stand by that argument, however.
Cathcart's office approved the exclusive agreement with Absolute HVACR Inc., owned by Robin F. Thompson, for all of the school's heating and air-conditioning work, according to documents obtained by The News Journal.
"Their argument was that the company they used was the licensed company to do Trane products or whatever the products were," Wagner said.
In some instances, DSU split single jobs into multiple purchases to decrease the size of contracts and avoid bidding requirements, according to the still-unreleased audit. State procurement laws require agencies to get three quotes for jobs costing $25,000 to $49,999 and to have a formal public bidding process for contracts exceeding $50,000.
"I never really questioned why I worked exclusively," Thompson said. "People would say, 'Hey, it seems like you're getting a lot of work.' I just took it under the assumption that I was doing good work the way they liked it and the way I said I would do it."
"We kind of got made the scapegoat, which I thought was a little unfair," said Thompson, adding he rarely worked directly with Cathcart but rather Cathcart's employees. "You ask for a bid, I'll give you a bid. If you give me the job, you give me the job. Whether you got a bid from two other people isn't in my world."
State law allows agencies to enter into exclusive agreement for products or services if approval is granted by the state. DSU did not obtain state approval.
Procurement managers should rely on a single provider of a product or service as little as possible, otherwise such arrangements will inflate costs, according to purchasing experts.
Most organizations engage in so-called "sole source procurement" only for "very rare services only one person could provide," such as a specialized software program, said Meri M. Stockwell, a purchasing and procurement consultant. Heating and air conditioning would not fall into that category, she said.
"No, definitely not," she said. "That's something where it should be the more competition the better. ... There's probably many service providers that provide that same service."
The audit found DSU should have obtained bids or quotes for between $884,350 and $1.02 million of the work, according to the draft reports.
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