Audit Of Nevada Agency Use Of State Workers As Contractors Finds Abuse, Potential Criminal Activity

By Sean Whaley / Nevada News Bureau
CARSON CITY – An audit of Nevada state agencies using current and former employees as contractors has identified numerous potential concerns, including a case of one worker seeking payment for 25 hours of work in one 24-hour day and another where a former state worker is now earning $350 an hour as a contractor versus $65 an hour in his state job.
The audit also found an example of a current state employee earning $62,590 as a contractor in fiscal years 2008 and 2009 while earning a state salary as well.
At least eight examples were identified where state employees working as contractors either did the contract work during regular state work hours or could not provide documentation to show they did the work on their own time.
The audit also shows that the Legislature was kept in the dark about much of the contract work by state employees because the Department of Administration used a narrow definition of the term “consultant.”
State Sen. Sheila Leslie, D-Reno, the chairwoman of the Legislative Commission’s Audit Subcommittee, said the audit suggests the potential of criminal actions in some cases. The panel voted to turn the audit over to Attorney General Catherine Cortez Masto for review and possible action.
Even if there is no criminal activity, the audit shows abuses of the contracting process, Leslie said.
Andrew Clinger, director of the state Department of Administration, agreed the use of current and former state employees as contractors “is out of hand.” The agency accepted all seven recommendations made in the audit.
The Legislature is expected to further address the issue in the upcoming 2011 session.
The use of current and former state employees as contractors was a major issue in the 2009 legislative session. The Legislature passed Assembly Bill 463 to tighten up the use of consultant contracts for current and former state employees.
But because of the narrow definition of consultant used by the state, AB463 has not resulted in information about such contracts entered into by the state being provided the lawmakers, the audit found. The Department of Administration did not provide any consultant contracts to the IFC for review and approval from July 2009 through July 2010, a period of more than one year, the audit found.
“Therefore, only under rare circumstances would a contractor be deemed a consultant and reported to the (Legislature’s Interim Finance Committee),” the audit found. “In contrast, boards, school districts and the Nevada System of Higher Education (NHSE) used a broad definition of consultant and reported many contracts to the IFC.”
The audit identified 250 current and former employees providing services to the state. These employees were paid a total of $11.6 million during fiscal years 2008 and 2009, the years covered by the review.
The state employee who put in for 25 hours of pay in a single day was paid for 10 hours of contract services, a regular 10-hour shift on his timesheet, plus an additional five hours of overtime.
The former employee being paid $350 an hour as a contractor compared to $65 an hour while a state employee is identified as a person with “an extensive background in complex water and natural resource issues.” The individual started work as a contractor at the higher rate of pay immediately after leaving state employment. The contract is still in effect and has been extended through June 30, 2011. As of September this year, the contractor has earned $472,493 from the state.
Among the other audit highlights:
A former state employee had a contract rate of $150 an hour versus $71 an hour as a state employee. The individual retired and came back to the same agency as a consultant regarding water and natural resource issues. The contract started in December 2007 and has been extended through February 2013. As of September 2010, the former employee has been paid $55,125.
A significant number of the current and former state employees doing independent contractor services are doing work similar to their state jobs. A total of 51 of 111 contracts reviewed show pay for similar work, including 18 current and 33 former employees. Many returned to the same agencies where they had worked.
The audit did find appropriate situations for employing a former employee as a consultant.
“Former employees provide a valuable resource to the state because of their knowledge and skills gained through years of state service,” the audit said.
In one example, a firefighter provided training for the Department of Public Safety at a rate of $26 an hour. Total payments were $1,400 over a two-year period.

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