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Report: Jefferson County Overpaid for Sewer Rehab

Fri October 10, 2003 - Southeast Edition
CEG



BIRMINGHAM, AL (AP) Jefferson County’s mismanagement of its sewer program will cost taxpayers hundreds of millions of dollars, according to a report released recently.

The county overpaid for unnecessary expenses by overbuilding treatment plants, overpaying contractors for sewer rehabilitation and using inexperienced managers to oversee the massive project, according to the report by BE&K Engineering Co.

Sewer rates could rise by as much as 12.5 percent through 2011 to generate the extra $611 million needed to comply with a federal consent decree ordering sewer repairs, meaning county residents will pay some of the highest sewer rates in the country, the report states.

BE&K led a team of consultants that issued the 156-page report on the sewer program to county officials. The county released the report Sept. 15, and The Birmingham News detailed the findings in a story the following day.

The report places much of the blame on the county, saying it severely mishandled the $3-billion sewer program, including hiring inexperienced staff to oversee the project.

“The county and [its staff] have made a number of unwise decisions, which when combined, have significantly increased the program’s capital and operating costs,” the BE&K report states.

Commissioner Gary White, who took over the sewer program last year and called for the exhaustive audit, said county officials could begin implementing the report’s recommendations soon.

“This can be viewed as an opportunity for us to make some corrections,” he said.

The report found that the county’s Environmental Services Department overspent by at least $100 million in building wastewater treatment plants double to triple the required size.

The report also found that the department paid as much as $20 million more for sewer rehabilitation work than other communities did for the same projects.

A federal investigation is taking place into some of those problems.

Among the specific problems identified in the report was a poor accounting system used to monitor and pay contracts. Environmental services officials maintained one accounting system, while the county’s finance department maintained another, creating more than $100 million in accounting discrepancies, according to the consultants.

County officials also failed to include a cancellation provision in its contracts, which resulted in paying contractors $95 million for projects that were called off.

The county also lost millions by limiting the number of vendors who could participate on some sewer rehabilitation projects, the report found.

The vendors and engineering firms that were used were often inexperienced and not qualified for a job this large, the report said.

It is “unusual for an owner to use only local engineering talent without proven track records on projects of this magnitude and complexity,” the report said.