Audit: Lax NCDOT Retread Contracts Cost Taxpayers | Eastern NC Now

    Publisher's note: The author of this post is Barry Smith, who is an associate editor for the Carolina Journal, John Hood Publisher.

Dominant contractor produced substandard retreads while hiking prices

    RALEIGH     When Harry Price, co-owner of the BesTreads tire retreading business in Davie County, picked up some tires for retreading under contract from the state Department of Transportation, he noticed that the treading on the used tires wasn't up to standard.

    "I noticed that they did not meet the compound specification or the tread specs," said Price. He contacted Rep. Julia Howard, R-Davie, his state representative, and then drove to Raleigh to show the tires to the State Auditor's Office.

    Late last month, State Auditor Beth Wood produced an audit finding that the state Division of Purchase and Contract had lax oversight of retread contracts, letting the contractor raise its prices 30 percent price increase while producing substandard tires that cost taxpayers $89,000. The contract was with White's Tire Service in Wilson.

    The tires provided by White's did not meet the bid specifications for rubber compounds. In addition, the bid required a minimum tread depth of 24/32 inches. White's supplied DOT with 65 retreads that had a tread depth of 18/32 inches, 25 percent less than required, according to the audit.

    Price said P&C would put contracts up for bid, but would wait more than 45 days before opening the bids.

    "P&C did not follow its contract bid administration procedures and either award the contract within 45 days of accepting bids or obtain written confirmations from the vendors that they would continue to honor their bid prices," the audit report says.

    Instead, P&C awarded the contract 84 days after bids were received, resulting in a 30 percent increase in prices for the retreads, the report says.

    "The cost increase to the state could have been avoided if P&C had followed its contract bid administration procedures," the report said.

    Since the division did not take the necessary administrative steps to follow through, the state Department of Transportation paid $89,000 to White's Tire for about 900 retread tires that had a lower quality rubber than that required when a contract was in place, the report continues.

    The audit recommends that the division should implement procedures limiting the possibility of non-contract periods from occurring, monitor contractor performance on a regular basis, seek reimbursement from White's Tire for the cost of substandard retreads received, and determine to what extent White's Tire should be able to sell retread tires under the current and future state contracts.

    The audit looked at an eight-month period from Nov. 1, 2012, to July 1, 2013.

    The report says the state may not be able to collect any of the $89,000 spent on the substandard tires.

    "Because there was no contract in place at the time, the quality of the tires did not actually violate any contract terms," the report says. "Consequently, the state may have no recourse."

    That's frustrating to Price. "It looks like White's is going to escape again," Price said.

    Price noted that White's was the state's sole contractor for more than three decades, providing retread tires for DOT trucks and school buses.

    The division and the Department of Administration, which oversees the division, generally agree with the auditor's findings.

    In a letter to Wood, Secretary of Administration Bill Daughtridge said the division has restructured completely, replacing 23 of 38 employees, and that training for contract administrators is now in place.

    "In summary, the division has corrected the contract administration deficiencies identified in this report," Daughtridge writes.

    Daughtridge added that issues with White's already have been addressed.