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NE: Audit finds millions of state tax dollars at risk

By   /   August 20, 2012  /   21 Comments

By Joe Jordan  | Nebraska Watchdog

[Update: August 20, 4 p.m. Top Heineman aide will agree to disagree with a critical state audit...see new information in italics below]

One of the state’s biggest spenders is under fire.

State Auditor Mike Foley

According to an investigation by State Auditor Mike Foley, the Department of Administrative Services —run by one of Gov. Dave Heineman’s closest political confidantes — is guilty of a long list of problems, some possibly costing taxpayers millions.

Foley’s 55-page audit of the Material Division of DAS uncovered questionable bidding practices, inadequate recordkeeping, and erroneous accounting. In addition Foley says DAS failed to provide information his office requested.

“The taxpayers of Nebraska deserve better than what is occurring here,” Foley said.

DAS Director Carlos Castillo tells Nebraska Watchdog the audit is full of holes.

Among DAS’s miscues is an $8.9 million road oil contract which, according to Foley, was awarded prematurely at best.

Foley said Jebro Inc., a Sioux City, Iowa firm, got the contract over one other bidder, while state law requires at least three bids.

Foley said that fewer than three bids are acceptable with the governor’s OK. Foley said there are no records indicating the governor’s approval in the Jebro deal.

“Official DAS procedures for awarding contracts with fewer than three bids were ignored by the agency,” Foley said.

Castillo says when only two bids came in he gave the go-ahead. According to Castillo as head of DAS the governor has delegated purchasing decisions to him.

The audit also accuses DAS of paying former state workers who should not have been paid.

Foley said four employees were overpaid “at the time of their termination, with one … receiving a paycheck … he did not earn.”

According to Foley, DAS never got the money back.

And then there’s the case of the Omaha Paper Company.

Foley says a $3.6 million contract with the firm appears to be costing the state nearly three times that much.

According to Foley, DAS’ own records find the state spending “over $10.8 million with no reasonable explanation for the discrepancy.”

Castillo tells Nebraska Watchdog that his office will go through the audit line-by line but insists there are no questionable practices in place.

As for Foley’s claim that DAS didn’t cooperate with the audit Castillo says, “What (Foley) wanted he got.”

Contact Joe Jordan at joe@nebraskawatchdog.org.

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Joe Jordan

  • 68102 guy

    Other people’s money. They just don’t care. I’d like to have Mr. Castillo’s personal checkbook for a couple of days.

  • Biff

    Well the guv did brag about cutting 1,500 state jobs since he came into office. Perhaps the DAS doesn’t have enough employees on staff to keep on top of this kind of detail.

  • racefish

    A lot of accusations but no responses. This is going to be a difficult process to figure out.
    The governor needs to do something now to get ahead of the thing.

  • http://www.facebook.com/profile.php?id=1133046229 Carole Sterup Kroeger Denton

    Gov. Dave doesn’t oversee this department like he does NEHHS, where he sends determined to cut programs for the vulnerable. Not to mention not cooperating with the ACA so that all Nebraskans can have health care. He’s kind of a MYOPIC MAN.

  • Joan Bale

    And it is our Gov who ends up with the sole responsibility of making the decision of the TransCanadian Pipeline that will cost millions when, I repeat, when it breaks and God knows how many lives will be lost. How many more of his buddy’s are “helping” to run our state!

  • http://www.facebook.com/janeflemingkleeb Jane Fleming Kleeb

    Carlos refused to release info to Foley around health reform, and of course Gov. Heineman back up his former campaign manager Carlos…as we have said before, Heineman runs our state like its the Nebraska Republican Party rather than our state government. http://journalstar.com/news/state-and-regional/nebraska/article_4a2f43f4-b6f2-11df-884d-001cc4c002e0.html

  • Up in Omaha

    Jane, how about you release Bold Nebraska’s donor first. Then we can talk about Carlos

  • Dave Fall

    Thanks again to Mike Foley!!
    Well Governor I have said you are inept before but I am beginning to think Incompetence is most likely the truth.

  • resistwemuch

    Two things. Tom Osborne should have been elected but for the good old boys in the republican elite that used a scorched earth campaign against him. And regarding Mike Foley, it is becoming more apparent that his “audit” of the Omaha Fire Department was anything but. Ever audit since by his office has come up with definitive proof one way or another in the final review. This was not the case in the fire department where he said he couldn’t make an objective finding one way or the other.

  • Pat Boyle

    Nope, talking about the DAS. Mike Foley for Gov!!!

  • Dave Fall

    Just read the administrations response. Here is the deal guys you take the audit and you correct every single problem it highlights. It is called Management not politics.But then Governor Wacko doesn’t seem to know the difference..

  • Observer

    With the exception of the paper company; I would say that all of the other “findings” are easily explainable. I am sure that further digging into the Omaha Paper Company will in the end explain itself. People, let’s not jump to pointing fingers so fast. Allow time for rebuttal, then ask the tough questions, not accusations. What is this country coming to when all we can do is go around name calling and drawing lines based on party affiliation? Remember, United we stand, Divided we fall. This country is in a tail spin downward right now. I am all for removing goverment fraud and abuse, however, nothing here really points to that at this time.

  • D. Mark

    Who is right? It is up to the Governor to let us know, believe he is a good Governor and he will do so! Just because each says the other is wrong, does not make it right! Can we believe either one?

  • Jazzee

    It would be nice to know what the laws/rules are and additional information about the employees that were paid before sound bites are taken as the entire truth of what happened. What all does the Omaha Paper Co provide for the state? The fire department is already over budget and no one ever seems to care they just kick the can as the idiot mayor always tells us. whatever happened to that old investigative reporting…
    And as far as obamacare I am glad the Governor is ignoring the nightmare law I would suggest you try and read it and see what really is in it.

  • jim mason

    With the new Obamacare/ObamaTax being dumped on the Governor directly, how is he going to have any time to run the state’s other agencies the way that everyone wants? Impossible. Gov. Heineman has Nebraska at the lowest debt per capita ratio in the Nation. We should be proud of what Heineman has done, but of course, let’s target a section that he yes is ultimately responsible for, but cannot stand there and approve everything that is in process. That is what others are responsible for. Good God, there was only two bidders when the guidelines require three!!!! Oh the sky is falling over that. Do any of you realize that sometimes it is hard to find three bidders in these outer areas? What they should consider is a project that is costing money waiting before expenses get higher while waiting to satisfy an obscure guideline requirement. Get the project underway and done before the left cries louder than they already are. We have serious issues ahead of us to worry about this too much.

  • State worker

    Jane: If you are referring to how Carlos would not release health records of state employees, then how can you be upset with him? Foley was not able to guarantee that state workers would not be identifiable by the “number” assigned to the record of their insurance claims. As a woman, I am glad that my records are not available for public review. Considering you are with the “stay out of my vag___” crowd, I am suprised you didn;t support Carlos and his protection of people’s personal health information.

  • http://www.facebook.com/profile.php?id=1709212272 Kirk Welch

    Ya know what? They are all career Politicians steeped in Partisanship and cronyism. They, none of them, want change or accountability. What they do want and count on is more of the same bickering and BS that leads us down the same path expecting to end up in a different location. We as citizens both Democrat and Republican continue to bite and “WE” get nowhere. Our Gov. is as stagnant as most of the rivers in this State are now. There is no and I repeat no accountability for poor financial decisions made by our “leaders”. the best way to win is to divide and conquer and Politicians on both sides of the isle are masters of this knowing that their careers depend on it. It will NEVER change until we demand and get full disclosure, transparency and accountability.
    Keep on name calling and placing the blame on your neighbors and see where you end up in 5 yrs. I can guarantee you it will be standing in the same puddle of BS your standing in now, Word.

  • Watching_From_Lincoln

    And when he continues to “ignore” it too long, Do Nothing Dave will find that the State of Nebraska will have NO control over the State-ran Health Insurance Exchange when the Federal Government takes over running the exchange November 16th 2012. So much for all the “States Rights” bullshit we keep hearing from all these “Republican” ideologue Governors who are merely pandering for Koch money instead of the best interests and health of their citizens.

    You can NOT justify 1/4 of Texas’ cresidents having NO health care insurance of ANY kind, nor Do Nothing Dave’s refusal to see that 28,000 more Nebraskans obtain health coverage who would not currently qualify under expanded Medicaid coverage that will cost the State of Nebraska NOTHING for the next three years and only 10% after that – as opposed to the current 30-40% State match.

  • Watching_From_Lincoln

    No, Carole, he is a Little Furher wannabe.

  • Watching_From_Lincoln

    Resigning effective 8 AM Wednesday morning August 22, 2012 would be a good start.

  • Joe Sixpack

    Has DAS balanced the state’s checkbook this decade? A couple years ago I learned that they were not able to balance it and could not account for millions of dollars of our tax money. I want to know if someone stole that money!