BOARD OF COUNTY COMMISSIONERS

GENERAL SERVICES

CONSTRUCTION CONTRACT FOR THE

FLORIDA BOTANICAL GARDENS

REPORT NO. 2000-09

DATED: JUNE 22, 2000

The Board of County Commissioners

and

The Clerk of the Circuit Court

Pinellas County, Florida

The Internal Audit Division has completed an audit of the contract with Beers Construction Company (Beers) for the development of the Florida Botanical Gardens.

PURPOSE

The purpose of this audit was to: 1) determine if the terms of the Beers Construction Management Agreement for the Florida Botanical Gardens are being complied with, 2) evaluate the effectiveness of Beers and General Services contract oversight process, and 3) determine compliance to any applicable laws.

SCOPE

The scope of the audit included a review of the contract and related documents. Audit procedures included a review of bonds, insurance coverage, and other documents that were requirements of the contract. We tested to determine if contractor payments and reimbursements were in compliance with the terms of the agreement. Project oversight activities were analyzed. Applicable laws were tested for compliance. The audit period covered was from January 1, 1998, through February 29, 2000. We performed such other audit procedures as we considered necessary in the circumstances.

BACKGROUND

On March 10, 1998, the Board of County Commissioners (BCC) approved a contract for Construction Management Services with Beers for the Florida Botanical Gardens (FBG). The FBG serves as a campus for the Cooperative Extension Service, the GulfCoast Museum of Art, and Heritage Village. Its purpose is to educate, inspire, and display the arts, history, and the environment.

Beers is paid a fixed fee for managing the contract and is reimbursed for the cost of constructing the project. The construction segment of the project is broken out into several different phases. Each phase has its own Guaranteed Maximum Price (GMP) which is approved by the BCC. This audit included a review of the first three phases. The Construction Management Fee and combined GMP for all three phases was $8,087,760. Total expenditures during the audit period were $5,871,252.

Work for the three phases has consisted of temporary access roads and tree clearing which allowed construction of the Florida Gulf Coast Arts Center; the installation of a pedestrian bridge that links the Gulf Coast Museum of Art and Heritage Village; creek realignment; new retention ponds; and permanent drives, parking, and underground utilities for the Florida Gulf Coast Arts Center.

INTRODUCTION

The results of our review are shown below. They begin with an overall evaluation followed by detailed discussions of the findings and recommendations with management's response.

OVERALL EVALUATION

Beers is effectively managing the project and is complying with most contract requirements; however, terms relating to Bonds, Insurance, and Notice to Proceed were not fully complied with. The oversight process of General Services is effective; however, internal controls could be strengthened in the areas of fixed assets and the processing of the monthly Applications for Payment (AFP). Applicable laws are being complied with. The following items require management's attention.

FINDINGS, RECOMMENDATIONS, AND RESPONSES

FINDING 1 - General Services' internal controls over the review and approval process of AFP did not detect processing errors.

AFP submitted by contractors should contain adequate backup to support reimbursement requests, and reimbursements should be authorized by contract terms.

Written policies and procedures should be established for the review and approval of AFP to promote consistency in the reimbursement process and to implement a strong internal control environment.

Twelve AFP totaling $1,625,810 from a population of forty-seven AFP that totaled $5,630,931 were reviewed from the time period of January 1, 1998, through January 31, 2000. The following items from the sample were noted:

There are no written policies and procedures that define the responsibilities of each reviewer/approver for the AFP process. Four individuals within General Services' Design & Construction Division review the AFP before it is sent to Finance for payment; however, there is no process in place to ensure all areas are covered in the review process.

FINDING 2 - Bond terms were not properly monitored for contract compliance.

Section 7, Bonds, of the Construction Manager's Agreements states, "Within five (5) business days after the GMP is agreed to by OWNER and CONSTRUCTION MANAGER, CONSTRUCTION MANAGER shall provide OWNER with Performance and Payment Bonds, . . . , in the amount of 100% of the total sum of the Construction Management Fee and the GMP, the costs of which to be paid by the CONSTRUCTION MANAGER."

A Performance and Payment Bond was not executed for the Construction Management Fee or for phase I. A Performance and Payment Bond was executed for phase II & phase III; however, it does not appear it was received within five (5) business days after the GMP was approved. The Performance and Payment Bond for phase II was purchased by Beers in November 1998. The GMP for phase II was approved by the Board on August 8, 1998. The Performance and Payment Bond for phase III was purchased by Beers on January 1, 2000. The GMP for phase III was approved by the Board on March 3, 1999.

FINDING 3 - A Notice to Proceed was not issued for phase II or III.

Section 8. Contract Time and Liquidated Damages of the Construction Manager's Agreement states, ". . . The "Construction Phase Commencement Date" shall be established in a Notice to Proceed to be issued by OWNER after the Construction Documents have been completed by the DESIGN PROFESSIONAL and approved by the OWNER."

This contract is broken out into several different phases. For each phase the Design Professional prepares documents that specifically identify the work to be carried out for that particular phase. A Notice to Proceed was issued on July 7, 1998, for Construction phase I services; however, Management did not execute a Notice to Proceed for phase II or III. If it became necessary to assess liquidated damages for the project not being completed timely, a formally documented start date could not be determined.

FINDING 4 - The contractor did not obtain insurance coverage for worker's compensation or for automobile liability.

Exhibit G of the Agreement for Construction Management Services lists the amounts and types of insurance required. Insurance coverage is required for worker's compensation and for automobile liability. The certificates of insurance did not include coverage for these two items.

FINDING 5 - General Services does not have a procedure in place that tracks assets purchased by contractors that could have a residual value at the end of a project, to ensure the County will obtain possession.

Assets purchased by Beers and reimbursed by the County for use in the on-site field administration office should be recorded/tracked by General Services to assure proper dispersion at the completion of the contract.

General Services Management authorized Beers to purchase computer equipment, software, office equipment and furniture for use in the on-site field administration office. Audit finds no problem with Management's financial decision for purchase rather than a lease alternative. The Beers contract does not expressly give the authority to purchaseequipment. Section 6A4b of the agreement gives the authority to pass through "rental charges for temporary facilities including Project site field office, machinery, equipment . . . ." The contract does cover the return/value for surplus or equipment with regard to the construction phase of the project, but is silent on the dispersion of office equipment.

Audit's review of all the billings for phase II found approximately $25 thousand in purchased assets where the expense was reimbursed by the County to Beers. There is no control in place to ensure the County will obtain possession of assets at the end of the contract.

Audit supervised by:

Audit performed by:

Approved:

Karleen F. De Blaker
Clerk of the Circuit Court
Ex Officio County Auditor

Divider Bar

Back to 2000 Audit Reports Listing

NUMBER OF TIMES THIS PAGE HAS BEEN VISITED : Page Hits Counter