Sunday, January 5, 2014
TONASKET The state auditor has scolded North Valley Hospital for its remodeling project business practices in 2013.
A finding against Hospital District No. 4 was issued after an audit of the hospital’s books for 2011 and 2012. The report was released Dec. 30, 2013, by the state.
The Washington State Auditor’s Office said the district started a project to remodel the hospital building’s second floor, with an estimated cost of $180,000 and intended to use day labor for most of the work.
After starting the project, the district found it had to bring systems up to current health and building code standards.
“To date, the project is approximately 80 percent complete, and has capitalized costs of approximately $419,000,” the audit report said. “The district did not formally bid the project as required, and exceeded its statutory authority when using day labor costing approximately $47,000, and acting as the project’s general contractor.”
The hospital district, in a written response, said it’s taking steps to correct problems cited by the auditor of inadequate district policies and procedures, and not having knowledgeable staff to ensure compliance with state laws related to public works and bid requirements.
“We’ve taken steps so this will never happen again,” board Chairwoman Helen Casey said in an interview.
The remodeling project has been finished, she said.
North Valley Hospital Chief Executive Officer Linda Michel could not be reached for comment.
Oroville resident Rosa Snider, who has long questioned the hospital district’s fiscal practices and ran unsuccessfully for a board position last November, was interviewed by the state Auditor’s Office for the audit. She said she was “a little disappointed” that not all information provided was included in the audit report.
“Whose head’s going to roll?” because of the cost of the remodeling project, she asked.
The auditor also found the district did not comply with other public works laws when it:
• Procured architectural services costing approximately $10,000 without evidence that a competitive negotiation process was used.
•Used contractors without obtaining evidence that prevailing wage were paid, obtaining performance bonds or meeting retainage requirements.
• Didn’t receive certification from the state departments of revenue, employment security or labor and industries that all axes had been paid in full.
“The district cannot demonstrate it received the best price for its public works project, and that it provided for fair competition,” the finding said.
“The district could be responsible for the wages and benefits to workers paid less than the established prevailing wage rates.
“The district could also be held responsible for claims arising under the contract or payment of taxes due to the state that the contractor did not pay.”
According to the auditor, the district should improve its accountability to district residence for compliance with procurement laws by requiring training that ensures responsible employees have a complete understanding of the applicable laws and regulations, and establishing and following written policies and procedures to ensure procurement laws are followed and competitive practices are used.
In response, the hospital district said several employees attended state Department of Labor and Industries training in October.
“Other training will be held as available in order to keep current on new regulations,” the hospital said.
North Valley Hospital has joined the Municipal Research and Services Center of Washington and planned to start using a small works roster with an online database as of Jan. 1.
“Letters have been sent to entities on our current small works roster informing them of the change,” the district said.
The center offers other resources the hospital will use for education.
In addition, policies and procedures are being reviewed and updated to ensure that procurement laws are followed and competitive practices are used.
The auditor’s office said it would review the situation during its next audit.
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