REPORT NO. 2000-10

DATED: AUGUST 17, 2000

The Board of County Commissioners


The Clerk of the Circuit Court

Pinellas County, Florida

The Internal Audit Division has completed an audit of the contracts for management of the well fields on the Cross Bar and AL-Bar ranches located in Pasco County.


The purpose of this audit was to: 1) determine compliance with terms of the contracts relating to management of the Cross Bar and AL-Bar Ranches; 2) review payments made to the contractors for appropriateness; and 3) evaluate the adequacy of documentation supporting the services provided.


We reviewed all contracts relating to the management of well fields owned by Pinellas County that are located in Pasco County. We interviewed staff and related parties, as necessary, and reviewed operations of the Cross Bar and AL-Bar Ranches. Payments made during the audit period of January 1, 1999, through December 31, 1999, were reviewed. We performed such other procedures as considered necessary in the circumstances.


In 1976, Pinellas County purchased the Cross Bar Ranch located in Pasco County. The ranch was leased for cattle and crop operations. In 1990 the AL-Bar Ranch, which adjoins the Cross Bar Ranch, was purchased and leased back to the seller to continue ranching activities. The two ranches combined are approximately 12,000 acres. It was the desire of Pinellas County to implement a forestry management program that reflected responsible financial planning and addressed the concerns of the primary land use. The plan that was developed included establishing a pine tree forest to generate revenue from the sale of pine straw and, eventually, the timber. It also included setting aside acreage for enhancement of wildlife that is considered endangered.

On November 3, 1992, the Board of County Commissioners (Board) approved an agreement with Natural Resource Planning Services, Inc., a consulting forestry firm, to provide forestry operation services, and to restore and enhance a wildlife habitat consistent with good stewardship management practices of public lands. The agreement was for five years with six options to renew. Each renewal period is for an additional five years. The first renewal option was approved on June 10, 1997, for a cost not to exceed $260,317 over five years.

On March 12, 1996, the Board approved an amendment that created a separate agreement for wildlife management services. This agreement provides $654,550 over a five-year period with options to renew for four additional five-year terms. The goal of this agreement is to provide monitoring of specific species and improvement of their habitats.

An agreement was entered into with Albert Roller on November 3, 1992, to provide land management services. The agreement was for five years with options to renew for six

additional five-year terms. The first option to renew was executed on June 10, 1997, with a total five-year cost not to exceed $1,737,611. Mr. Roller provides security, maintains both ranches, and supervises all activities on the properties.


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.


We have concluded that most of the terms of the contracts relating to management of the Cross Bar and AL-Bar ranches were complied with. Payments made under the land management and forestry agreements were appropriate. Payments under the wildlife management agreement exceed some of the allowed line-item amounts. There is no documentation supporting the services provided under the land management and forestry agreements. An annual report is submitted to document services provided under the wildlife management agreement.


FINDING 1 - Management is not adequately monitoring payments to contractors.

The wildlife management agreement with Natural Resource Planning Services, Inc. is a line-item agreement with maximum costs established for each of the seven main activities, plus an allowance for startup costs relating to weekly monitoring, and an allowance of $31,000 for contingencies.

Costs have exceeded the allowable amount in three of the seven categories, as well as the reserve established for contingency items. The over-expended line items are:

Line Item Allowed Spent

Permit Assistance

Cross Bar $19,620 $35,583

Secondary Sites 9,670 18,505

AL-Bar 16,650 22,581

Total Permit Assistance 45,940 76,669

Annual Wildlife Utilization &

Management Report 41,500 68,465

Annual Public Awareness 17,000 35,541

Contingency 31,000 54,819

Under the Permit Assistance line item, there are six specific items noted as categories where the estimate within the Scope of Services should not be exceeded. Three of those six items, all related to charges for meetings, have been exceeded.

Management's review of invoices also did not detect several errors pertaining to the escalation clauses. Natural Resource Planning Services, Inc. instituted a price adjustment in January 1998, that was not due to be enacted until November 1998. The amount of that adjustment was calculated using an incorrect base monthly fee which caused the monthly fee to decrease. These adjustments were calculated by the contractor. Also, use of the wrong consumer price index for adjustments in January 1998, and January 1999, went undetected. The adjustment effective November 1999, was calculated using the correct index, but was put into effect less than 12 months from the preceding adjustment.

FINDING 2 - Requests for contingency services were not in accordance with the agreement.

Section 4d of the wildlife management agreement with Natural Resource Planning Services, Inc. requires additional services, resulting from unforeseen circumstances or minor changes in the Scope of Services, be requested in writing by the County's Director of Utilities. None of the $54,819 billed by the contractor and approved for payment by Utilities' management as contingency services were requested in writing by the Director of Utilities. The only written request was from the Manager of Hydrogeology for assistance on an EPA Wetland Grant.

The need to have contingency services requested in writing is to provide adequate control over anticipated expenditures and adherence to budgetary constraints. As evidenced in the previous finding, the contract allowance for contingency items had been overspent by $23,819 as of December 31, 1999.

FINDING 3 - Approval was not obtained from the Board of County Commissioners when required.

Purchasing Manual Section 3.27, Item 1, requires change orders exceeding $25,000 be approved by the Board of County Commissioners. Section 8e of the wildlife management agreement with Natural Resource Planning Services, Inc. states that "no changes or modifications of this Agreement shall be valid unless the same be in writing and signed by all parties hereto."

The vendor's Summary of Billings indicates that the line item for Annual Wildlife Utilization & Management Status Report was increased $11,200 annually beginning in the second year. This is a total increase to the agreement of $44,800. The increase is for providing monitoring beyond that which was required under the original scope of services. Management stated that it is their policy to only request one change order when the project is close to completion. This practice removes the Board's authority to approve or deny any changes to the terms of the contract.

According to the vendor's billing summary, funds allocated for some line items were reallocated to different line items. None of this shifting of allowed costs was agreed to in writing.

FINDING 4 - Costs related to the projects at the ranches are not clearly identified.

The management objective for long-term financial return, as stated in the Request for Proposal dated September 4, 1992, is:

A system of accounting separately for the revenue and expenditures related to the various projects at Cross Bar and AL-Bar ranches from other activities of the Utility Department was not established. Most costs are treated as an administrative cost in the Water Revenue and Operating fund. The seedlings and some forestry management costs were capitalized in the Water Renewal and Replacement fund. As a result, costs pertaining to the various projects are not clearly identifiable, making it difficult to compare results and determine if the forestry operation is profitable and whether cash flow is in line with the projections that were made. The latest projection indicates that the timber project will not have a net positive cash flow until the year 2019.

The contractor prepared a financial analysis after five years of operation; however, it is not comparable to the analysis submitted with their bid proposal because:

  1. 1. Different inflation assumptions are made for each one (the original assumes zero inflation, whereas the 1998 analysis assumes an inflation rate).
  2. 2. The original analysis only included the cost of the trees and commissions on the sale of stumpage. It omitted costs for land and forestry management. The analysis, submitted in August 1998, includes the cost of the forestry agreement as well as the cost for all land management and wildlife management services.
  1. 3. The 1998 analysis included the cost of seedlings twice.
Additionally, the amount used for management fees in 1997 was not correct. They were understated by $22,848.

FINDING 5 - All costs pertaining to the timberland were not capitalized.

Enterprise funds are accounted for on an accrual basis which requires the capitalization of capital expenditures and the subsequent depreciation/depletion of those costs. The following costs pertaining to timberland should be capitalized:

Site Preparation


Labor and tools used in preparing and planting the seedlings

Only the seedlings and site preparation costs paid under the forestry management agreement were capitalized. None of the costs relating to planting the trees and any site preparation performed by the land management contractor were capitalized.

FINDING 6 - Invoices lack sufficient documentation for services provided.

Compensation to Albert Roller for land management and to Natural Resource Planning Services, Inc. for the forestry operations are fixed monthly amounts. There is a scope of services attached to both agreements. Not all activities are required on a monthly basis and some of the activities require coordination by the two consultants and representatives from Utilities. Section 2.0 of the forestry agreement Request for Proposal requires the selected contractor to prepare quarterly Project Status Reports. Not all activities were included in the Work Plan Schedule included in the proposal and there is no written schedule to show when those activities would be performed or their outcome. For example, the forestry agreement with Natural Resource Planning Services, Inc. requires monitoring for insect and disease activities. There is no documentation to support if this was done, how frequently it was done, and the findings.

Albert Roller's agreement does not specifically require the submission of monthly reports. However, they would be beneficial in assisting management to efficiently monitor the completion of planned activities and determine if all required services have been performed.

Audit supervised by:

Audit performed by:


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

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