Audit flags Highlands schools’ construction oversight gaps

Audio By Carbonatix

(The Center Square) –Highlands County School District did not follow proper procedure for monitoring subcontractor selection for its Lake Country Elementary School expansion project, according to an audit by the Florida Auditor General.

No district personnel attended the subcontractor bid openings for a nearly $7 million contract, the audit found. Additionally, no one from the district ensured the subcontractor bids agreed with the contract amounts.

The Lake Country Elementary School expansion project included $5.5 million for services provided by 22 subcontractors. The district paid the construction management entity $6.8 million, which included payment for the subcontractor services, according to the audit.

“District personnel relied on the CME subcontractor selection process; however, such reliance provided limited assurance that the subcontractors were qualified and that services were obtained at appropriate cost and quality,” the auditor wrote.

An examination of the subcontracts confirmed that, of those examined, the subcontractors were properly selected and had the required licenses. The concern was that the district risked overpaying or receiving services from subcontractors that were not properly licensed.

Superintendent Brenda Longshore responded to the finding, saying the district would strengthen its procedures for monitoring construction manager subcontractor selection.

“Procedures will include appropriate District oversight, verification of required subcontractor qualifications and licensing, and confirmation that bid awards agree with subcontract amounts,” Longshore said.

The audit also discovered discrepancies between how much the district paid the construction manager and how much the construction manager paid the subcontractors for the work.

For example, the subcontractor cost for roofing was $384,732, which was $113,138 less than the guaranteed maximum price. When the construction manager is required to offer a guaranteed maximum price, the difference between the actual cost of the project and the guaranteed maximum price amount should be returned to the district.

Similarly, subcontractor costs for trusses were $250,000, which was $71,725 less than the guaranteed maximum price amount.

District personnel reported they were unaware of the discrepancies.

Longshore said the district will verify pay requests against applicable guaranteed maximum price and subcontractor contracts in the future and take appropriate action on the discrepancies found in the audit.

The district also potentially lost $39,000 in sales tax savings by not making direct purchases of construction materials. State law exempts the district from paying state sales tax on direct purchases.

“In response to our inquiry, District personnel indicated that they did not believe material purchases would yield substantial savings,” the auditor wrote.

Longshore said for future construction projects, the district would evaluate opportunities for direct material purchases to take advantage of the sales tax exemption.

“The district had not completed a major construction project in more than a decade; as a result, certain construction-related processes had not been fully incorporated into current practices. The district is actively reviewing and strengthening these practices to enhance oversight and ensure appropriate controls are in place for future construction projects. In addition, the district is in the process of engaging an independent auditing firm to perform a final construction audit of the two recently completed wing addition projects,” said Longshore.